LIBRARY 


UNIVERSITY  OF  CALIFORNIA. 
Deceived          IAN  19    1893.,^         ^_ 
^Accessions  No.H<M~l~l     .  Class  No. 


, 


. 


A  TREATISE  ON 

CO-OPERATIVE  SAVINGS  AND 
LOAN  ASSOCIATIONS 


INCLUDING 

BUILDING  AND  LOAN   ASSOCIATIONS 

MUTUAL  SAVINGS  AND  LOAN  ASSOCIATIONS 

ACCUMULATING  FUND  ASSOCIATIONS 

CO-OPERATIVE  BANKS,  ETC. 


WITH  APPENDIX   CONTAINING-  LAWS,  PRECEDENTS, 
AND  FORMS. 


BY 

SEYMO 


NEW  YORK 

D.    APPLETON    AND    COMPANY 
1891. 


COPYRIGHT,  1889, 
BY  D.  APPLETON  AND  COMPANY. 


PREFACE. 


No  form  of  direct  co-operation  among  men  of 
limited  means  is  attracting  more  attention  at  the  pres- 
ent time  than  the  class  of  associations  which  we  have 
grouped  under  the  name  of  Co-operative  Savings  and 
Loan  Associations. 

Professor  F.  B.  Sanborn,  Secretary  of  the  Ameri- 
can Social  Science  Association,  at  its  annual  meet- 
ing at  Saratoga  in  September,  1888,  in  a  report — 
the  most  complete  ever  made  in  this  country  relat- 
ing to  them — said  very  truthfully  that  "  at  the  rate 
the  building  associations  are  now  gaining,  the  time 
may  come  when  their  accumulated  savings  at  any  one 
time  may  exceed  those  of  our  saving-banks,  and  it 
is  doubtful  if  any  system  of  savings  has  been  de- 
vised which  has  such  a  tendency  to  produce  frugality 
among  persons  of  small  incomes  as  the  building- 
association  methods." 

Their  business  methods  have  been  little  under- 


IV  PREFACE. 

stood  in  the  past  outside  of  those  engaged  in  con- 
ducting them. 

From  Philadelphia,  as  their  "  breeding-place,"  they 
have  spread  throughout  the  country,  chiefly  through 
the  agency  of  persons,  who,  being  interested  in  an 
association  in  one  locality,  have  migrated  to  another 
and  become  the  moving  spirit  and  authority  in  organ- 
izing one  where  they  were  unknown  before,  each  asso- 
ciation becoming  a  new  center  from  which  knowledge 
concerning  them  has  radiated  to  other  localities. 

In  this  manner  faulty  methods  were  copied  and 
transmitted  from  one  place  to  another  as  readily  as 
good  ones,  and  it  has  often  occurred  that  the  organ- 
izers of  the  new  association  but  imperfectly  compre- 
hended the  scheme  which  they  were  attempting  to 
put  into  operation,  and  unwittingly  modified  it,  while 
in  other  cases  changes  were  made  to  secure  some 
benefit  to  those  managing  it  which  the  original  plan 
did  not  contemplate.  The  legislation  in  nearly  all  the 
States  has  been  crude  and  general  in  its  provisions, 
thereby  permitting  speculative  features  to  be  added  to 
the  beneficial  methods,  by  visionary  men,  as  well  as  by 
those  who  were  seeking  solely  their  own  advantage. 

Information  concerning  these  associations  in  books 
or  current  literature  has  not  only  been  meager  and 
fragmentary,  but  quite  inaccessible  to  those  wishing 
to  learn  their  manner  of  conducting  business,  or  to 
investigate  the  benefits  accruing  therefrom. 


PREFACE.  v 

From  these  causes  a  great  diversity  in  their  meth- 
ods has  come  to  pass  in  different  parts  of  the  country, 
and  many  variations  in  the  details  of  the  same  general 
method  in  the  same  locality.  As  found  at  the  present 
time,  they  are  a  natural  development  in  direct  co- 
operation which  has  come  to  pass  with  but  little 
guidance  or  supervision  by  the  State.  While  the  his- 
tory of  such  development  must  record  many  failures, 
when  considered  as  a  whole  they  have  been  more 
uniformly  successful  and  attained  better  economic  re- 
sults for  those  interested  than  any  other  form  of 
direct  co-operation  undertaken  in  this  country,  and 
are  now  attracting  widespread  attention  as  "institu- 
tions for  savings,"  their  friends  claiming  for  them 
advantages  which  the  savings-bank  does  not  possess. 

Our  aims  in  the  preparation  of  this  book  have 
been — 

1.  To  fill  an  apparent  demand  for  information  re- 
lating to  this  form  of  co-operation,  and  to  place  such 
information  in  a  form  accessible  to  all  desiring  it. 

2.  To  explain  the  principles  upon  which  the  typi- 
cal association  is  founded  in  such  a  manner  that  the 
reader  who  is  seeking  general  information  on  the  sub- 
ject may  readily  understand. 

3.  To  describe  the  important  variations  from  the 
typical  association  now  in  operation,  tracing  their  de- 
velopment and  the  causes  which  have  induced  them, 
and  discussing  briefly  their  respective  merits. 


vi  PREFACE. 

4.  To   furnish  a  complete  guide  to  all   persons 
wishing  to  organize  and  conduct  them  upon  methods 
that    are    safe,   equitable,   and   uniformly   successful 
when  adhered  to. 

5.  To  correct  certain  false  notions  which  are  often 
entertained  by  those  conducting  these  associations  re- 
lating to  the  subject  of  premiums,  and  the  benefits 
accruing  to   the   borrowers   therefrom,  by  reason  of 
dividends  added  to  the  shares  of  stock  upon  which 
they  have  borrowed. 

6.  To  print,  in  a  convenient  form  for  examina- 
tion, the  best   statutes   in   this   country   authorizing 
their  formation,  and   to  recommend  to  those  inter- 
ested in  legislation  relating  to  these  associations  the 
New  York  act  of  1887  and  the  laws  of  Massachusetts. 

We  are  earnestly  desirous  of  encouraging  the 
growth  of  this  form  of  co-operation  upon  simple, 
safe,  and  equitable  methods,  believing  that  when  so 
conducted  these  associations  are  the  most  potent 
agency  for  stimulating  steady  savings,  industry,  home- 
owning,  and  good  citizenship,  yet  devised  and  put 
into  operation. 


CONTENTS. 


CHAPTER  I. 

PAGE. 

CO-OPERATION,  INDIRECT  AND  DIRECT 1 


CHAPTER  II. 

SOME  OF  THE  BENEFITS  OF  CO-OPERATIVE  SAVINGS  AND 
LOAN  ASSOCIATIONS 9 

CHAPTER  III. 

TYPICAL  "  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS  "    16 

CHAPTER  IV. 

THE  GROWTH  AND  SPREAD  OF  CO-OPERATIVE  SAVINGS  AND 
BUILDING-LOAN  ASSOCIATIONS  .....  41 

CHAPTER  V. 

A  REVIEW  OF  THE  DEVELOPMENT  OF  THE  SCHEMES  UPON 
WHICH  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS 
HAVE  BEEN  AND  ARE  NOW  CONDUCTED  .  .  .  .70 

CHAPTER   VI. 

WHICH  OF  THE  SEVERAL  SCHEMES  CONSIDERED  is  BEST      .    96 


viii  CONTENTS. 

CHAPTER  VII. 

PAGE 

HOW  TO  ORGANIZE  A  Co-OPERATIVE  SAVINGS  AND  LOAN 
ASSOCIATION  UNDER  THE  NEW  YORK  ACT  OF  1887  .  113 

CHAPTER  VIII. 

HOW  TO  ORGANIZE  ASSOCIATIONS  UNDER  THE  NEW  YORK 
ACT  OF  1851,  AND  IN  ANY  STATE  WHERE  THE  LAW 
DOES  NOT  PROVIDE  A  DEFINITE  SCHEME  .  .  .  138 

CHAPTER  IX. 
How  TO  KEEP  ACCOUNTS 179 

APPENDIX. 

LAWS  OF  NEW  YORK 209 

LAWS  OF  PENNSYLVANIA        ,        c        .....  229 
LAWS  OF  MASSACHUSETTS      .......  236 

LAWS  OF  OHIO 244 

FORMS 247 

INDEX  .  .  295 


CO-OPERATIVE   SAYINGS 
AND    LOAN    ASSOCIATIONS. 


CHAPTER  I. 

CO-OPERATION,   INDIRECT  AND   DIRECT. 

THE  word  co-operation  is  a  generic  term.  There 
are  many  species  of  co-operation,  and  each  species  has 
many  varieties.  Some  are  direct,  and  others  are  in- 
direct. 

The  earliest  and  most  universal  form  of  co-opera- 
tion is  government.  This  is  one  species.  It  has  many 
varieties,  and  the  greater  number  have  been  conducted 
in  the  interest  of  special  classes.  Reigning  classes 
have  considered  the  masses  of  the  people  unfit  to  have 
a  voice  in  the  control  of  the  government,  as  fit  only  to 
be  subjects,  whose  highest  duty  was  to  obey.  They 
were  zealously  taught  the  "  divine  right  of  kings  "  to 
rule.  With  the  reigning  class  there  was  a  direct  co- 
operation in  government ;  with  the  masses  only  an  in- 
direct. While  the  latter  loyally  obeyed  the  laws  and 
submitted  to  the  commands  of  their  rulers  order  and 
stability  prevailed.  Comparative  security  from  foreign 
enemies  and  from  personal  violence  within  was  thereby 
obtained.  The  preservation  of  the  family  and  the  pos- 
sibility of  peaceful  living  were  better  than  anarchy, 
where  none  were  safe  from  rapine  and  personal  vio- 


2      CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONS. 

lence,  where  every  man  must  stand  guard  over  his  own 
person,  family,  and  property. 

The  struggles,  the  conflicts,  and  the  failures  have 
been  manifold  in  the  endeavors,  by  the  masses,  to  se- 
cure a  government  which  should  be  conducted  for  all 
classes  alike.  It  is  the  pride  of  our  country  that  di- 
rect governmental  co-operation  has  been  attained,  a 
government  by  the  people  and  for  the  people.  The 
fame  of  its  liberties  has  indeed  encircled  the  globe. 
No  more  sacred  duty  calls  upon  us  than  to  discharge 
to  the  best  of  our  ability  the  obligations  of  our  citizen- 
ship. Whoever  proves  himself  unworthy  of  member- 
ship in  this  grand  co-operation  is  unfit  to  become  a 
member  of  any  other  direct  co-operation.  The  Ameri- 
can citizen  that  will  sell  his  vote  or  betray  a  public 
trust,  or  seek  to  induce  another  to  do  so,  deserves  only 
to  obey  the  mandates  of  a  kingly  power. 

Keligious  organizations  constitute  another  species 
of  co-operation.  With  us,  these  organizations  have  no 
power  of  compulsion;  they  are  voluntary.  There  is 
direct  co-operation  of  all  who  unite  to  secure  the  ends 
for  which  the  organizations  exist.  Divorced  from  the 
state,  they  stand  upon  their  own  merits.  The  good 
they  accomplish  is  measured  by  the  individual  worthi- 
ness of  their  members.  The  church-member  who 
proves  himself  unworthy  to  be  a  member  in  the  direct 
co-operation  of  the  church,  proves  himself  unworthy 
to  be  a  member  of  any  other  direct  co-operation,  the 
objects  and  aims  of  which  are  worthy. 

Another  species  of  co-operation  has  for  its  aim  social 
enjoyment.  The  normal  man  hates  solitude ;  he  loves 
the  society  of  his  fellows,  whether  at  work  or  play. 
The  forms  of  direct  co-operation  for  social  enjoyment 


CO-OPERATION,   INDIRECT  AND  DIRECT.  3 

are  various.  Some  are  beneficent,  others  pernicious. 
Some  lift  men  and  women  into  higher  planes  of 
thought,  arouse  noble  aspirations,  and  stir  only  pure 
desires  j  while  in  others,  each  helps  to  hurl  down  the 
manhood  or  the  womanhood  of  the  other;  together, 
they  stifle  worthy  aspirations  and  fan  impure  desires, 
and  march  down  the  broad  avenues  that  lead  to  the 
bottomless  pit. 

Another  species  of  co-operation  has  for  its  object 
education.  It  is  one  of  the  worthiest  of  our  many  co- 
operations. There  are  many  varieties,  but  the  most 
beneficent  of  them  all  are  our  free  schools,  which  should 
be  cherished  by  every  friend  of  direct  co-operation. 
We  should  study  to  improve  them  in  their  teachers 
and  appliances  and  multiply  their  advantages.  They 
are  the  stepping-stones  to  the  attainment  of  mental 
training  and  knowledge  by  the  masses  of  our  people, 
such  as  shall  make  possible  the  successful  development 
and  conducting  of  direct  co-operations  in  the  straggle 
for  food,  clothing,  shelter,  and  material  prosperity. 

Another  species  of  co-operation  has  for  its  aim  the 
material  welfare  of  those  associated  therein.  Here,  as 
in  the  domain  of  government,  the  realm  of  religion, 
social  enjoyment,  and  education,  there  are  many  va- 
rieties ;  some  are  direct  and  some  are  indirect.  Next 
to  government  the  most  universal  form  of  co-operation 
is  that  which  results  from  the  "  division  of  labor,"  or, 
as  it  is  called  sometimes,  "  the  organization  of  labor." 

While  we  may  count  upon  our  fingers  the  grand 
divisions  of  labor — agriculture,  mining,  manufacturing, 
trade,  transportation,  professional  and  personal  serv- 
ices, the  various  subdivisions  of  these  divisions  will 
number  more  than  a  thousand.  We  are  too  apt  to 


4      CO-OPERATIVE   SAVINGS  AND   LOAN   ASSOCIATIONS. 

overlook  the  great  co-operation  arising  out  of  the  or- 
ganization of  labor,  and  neglect  to  give  just  credit  to 
the  beneficent  results  arising  therefrom. 

The  co-operation  thus  resulting  is  indirect.  We 
call  it  indirect  for  the  reason  that  the  divisions  of  la- 
bor come  to  pass  wholly  from  selfish  motives,  and  to 
secure  individual  gain,  regardless  of  its  effects  upon 
other  men  or  classes  of  men  ;  nevertheless,  the  good 
results  are  manifold-.  The  blacksmith  learns  and  fol- 
lows his  trade  solely  for  his  individual  gain ;  although 
wholly  selfish  in  his  motives  and  aims,  he  is  not  blame- 
worthy. He  comes  to  be  an  expert  in  his  trade,  and, 
by  reason  of  that  expertness,  he  can  produce  more  that 
is  beneficial  to  society,  or,  in  other  words,  more  of 
wealth,  than  he  can  by  being  a  "  Jack  of  all  trades  and 
master  of  none."  He  indirectly  co-operates  with  the 
carpenter,  the  cabinet-maker,  the  farmer,  the  tailor, 
the  merchant,  and  others. 

While  each  of  these,  in  his  dealings  with  him,  is 
ever  seeking  to  obtain  the  product  of  his  labor  as  cheap 
as  he  can,  and  obtain  as  high  a  price  as  he  can  for  his 
own  products  that  he  sells  to  him,  yet  the  blacksmith 
will  secure  the  necessaries  of  life  and  many  of  its  com- 
forts in  much  greater  quantity  than  he  would  if  he 
attempted  to  build  his  own  house,  construct  his  own 
furniture,  raise  his  own  food,  make  his  own  clothes, 
and  effect  no  exchanges  with  any  of  them.  Meager, 
indeed,  would  be  the  quality  and  quantity  of  his  food, 
clothing,  and  shelter,  if  he  had  to  obtain  them  from 
nature,  unaided  by  the  indirect  co-operation  that  results 
from  the  division  of  labor.  What  is  true  of  the  black- 
smith is  true  of  every  one  else. 

The  merchant,  while  he  seeks  to  buy  as  cheaply  as 


CO-OPERATION,   INDIRECT   AND   DIRECT.  5 

he  can  and  sell  at  as  great  an  advance  as  he  is  able, 
works  out  a  most  beneficent  co-operation  between  those 
of  whom  he  buys  and  those  to  whom  he  sells.  The 
owners  and  managers  of  railroads  build  and  conduct 
them  from  the  motive  of  personal  gain,  and  quite  re- 
gardless, as  a  rule,  as  to  how  their  business  enterprise 
may  effect  the  material  prosperity  of  those  with  whom 
they  come  in  contact.  They  have  in  many  instances 
been  able  to  amass  with  great  rapidity  fortunes  of  such 
magnitude  as  to  almost  become  a  menace  to  our  free 
institutions;  nevertheless,  they  have  been  the  means 
of  an  indirect  co-operation,  beneficent  in  as  great  a  de- 
gree as  the  magnitude  and  success  of  their  endeavors. 

There  are  some  classes  in  our  community  who  are 
wont  to  cry  out  in  bitter  terms  against  our  whole  in- 
dustrial system,  founded  upon  this  division  of  labor, 
and  regard  it  solely  as  a  mighty  machine,  whereby  the 
few  despoil  the  many.  That  many  evils  have  come  to 
pass  must  be  conceded. 

That  many  classes  of  laborers  do  not  receive  an 
equivalent  for  the  product  of  their  labor  can  not  be 
truthfully  denied ;  that  some  men  amass  fortunes  they 
have  not  earned,  and  that  there  is  the  possibility  of  a 
great  increase  in  results  for  good,  must  appear  to 
all  who  intelligently  and  candidly  review  the  results 
of  our  competitive  industrial  organization.  But  let  us 
not  overlook  the  good  that  has  come  and  is  still  flow- 
ing from  it. 

Let  us  keep  clearly  in  mind  that  it  is  the  highest 
form  of  industrial  co-operation  that  large  masses  of 
society  have  yet  been  able  to  maintain  successfully. 

The  day-laborer  secures  more  of  the  necessaries  of 
life  amid  the  grindings  of  industrial  competition,  al- 


6      CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONS. 

though  the  employer  retains  the  lion's  share  of  the 
results  of  his  labor,  than  he  could  possibly  secure  if  he 
was  laboring  alone  in  "the  struggle  for  existence." 
Let  us  not  tear  down  and  destroy,  and  "  fly  to  evils 
that  we  know  not  of  " ;  but,  as  we  attain  wisdom  and 
experience,  modify  and  add  to.  We  believe  there  is  a 
better  form  of  co-operation  attainable,  where  each  shall 
help  the  other  to  increase  the  result  of  his  labor,  and 
neither  take  from  the  other  any  part  of  that  which  his 
labor  has  produced. 

It  is  toward  co-operation  as  an  ideal  industrial  sys- 
tem that  large  masses  of  our  people  are  moving.  In 
theory  it  is  enticing ;  in  practice  it  is  difficult  to  attain. 
The  narrow  selfishness  of  the  average  human  activity 
thwarts  the  most  generous  labor  of  the  unselfish,  chills 
the  enthusiasm  and  weakens  the  efforts  of  the  philan- 
thropic. 

Let  no  man  or  class  of  men  ever  think  that  such  a 
system  of  direct  co-operation  can  be  thought  out  and 
planned  by  the  brain  of  man  and  put  into  successful 
operation  in  all  industrial  activities  and  among  all 
classes,  as  a  new  scheme  or  creation,  at  any  single  epoch 
in  a  nation's  history.  If  ever  attained  it  must  grow 
and  develop — as  men  grow  wise  and  self -restrained — 
through  long  periods  of  time,  and  be  tried  by  innumer- 
able failures  and  great  adversities. 

As  in  the  years  gone  by,  the  pioneers,  advancing 
westward,  have  here  and  there  gone  forth  in  the  un- 
broken forest,  felled  the  trees,  built  the  hut,  and 
through  years  that  have  lengthened  into  generations 
of  father  and  son,  the  son  taking  up  the  work  of  the 
father,  or  a  new  comer  occupying  the  abandoned  be- 
ginning, gradually,  with  unremitting  toil,  widening 


CO-OPERATION,   INDIRECT  AND   DIRECT.  f 

the  clearings,  improving  the  land,  until,  by-and-by, 
clearings  opened  into  clearings,  and  productive  farms 
joined  farm  to  farm,  and  the  prosperous  agricultural 
community  came  to  pass ;  so  must  be  the  beginnings, 
the  progress,  and  the  attainment  of  that  direct  co-opera- 
tion that  relates  to  the  material  welfare  of  society  as  a 
whole. 

Many  pioneers  have  heretofore  gone  forth,  many 
huts  have  been  built,  many  small  clearings  have  been 
made ;  some  are  widening ;  many  are  deserted ;  some 
have  been  re-occupied ;  but  the  great  forest  of  selfish, 
grinding  competition  still  remains  unbroken. 

Our  political  institutions,  joined  to  the  growing 
intelligence  of  the  masses  of  our  people,  present  oppor- 
tunities and  advantages  for  beginnings  here  and  there 
in  direct  co-operation  in  matters  relating  to  material 
welfare  never  before  existing. 

The  spread  of  education  and  varied  knowledge 
among  the  masses  of  men,  and  our  modes  of  rapid 
transportation  and  communication,  surpass,  not  only 
the  ideals,  but  even  the  highest  flights  of  the  imagina- 
tion of  the  centuries  prior  to  our  own. 

While  many  failures  are  doubtless  before  us,  we  be- 
lieve many  grand  social  achievements  are  yet  possible 
in  the  material  welfare  of  men.  Much  has  been  al- 
ready reached  by  means  of  co-operation.  Yet  all  that 
has  been  accomplished  is  but  the  beginning  of  greater 
achievements  to  come. 

The  efforts  in  the  special  form  of  co-operation  un- 
der consideration  have  been  more  uniformly  successful 
than  in  any  other.  The  associations  formed  for  the 
purpose  have  various  names.  The  most  common  name 
is  Building  and  Loan  Associations,  but  different  names 


8      CO-OPERATIVE  SAVINGS  AND   LOAN   ASSOCIATIONS. 

are  used  in  different  localities,  such  as  "  Building  As- 
sociations," "  Mutual  Savings  and  Loan  Associations," 
"  Homestead  Aid  Associations,"  "  Co-operative  Banks," 
etc.  We  prefer  to  class  them  under  the  name  of  "  Co- 
operative Savings  and  Loan  Associations."  This,  to 
our  mind,  describes  them  more  accurately  than  any 
other  name  by  which  they  have  been  called. 


CHAPTER  II. 

SOME   OF   THE    BENEFITS    OF   CO-OPERATIVE    SAVINGS 
AND   LOAN   ASSOCIATIONS. 

IN  every  business  center  of  our  land,  whether  a 
city  or  a  village,  there  is  a  large  class  of  the  population 
that  work  for  wages.  Some  are  artisans,  some  are 
clerks.  Their  thrift  and  prosperity  must  always  de- 
pend upon  the  amount  they  save. 

It  is  not  the  amount  of  wages  that  the  wage- worker 
earns  and  receives  that  makes  him  prosperous  and 
ultimately  independent,  but  the  amount  that  he  saves 
from  his  wages. 

Habits  of  saving  can  be  cultivated  as  well  as  habits 
of  spending.  With  every  person  the  temptations  to 
spend  money  are  manifold.  The  devices  by  which  he 
is  induced  to  part  with  his  money  are  numerous  and 
ingenious — from  a  church  lottery  to  the  dice  in  a  beer 
saloon.  Then  the  urgency  of  appetite  and  the  allure- 
ments of  social  enjoyment,  even  when  innocent  and 
harmful,  are  seductive  influences  that  lead  to  the 
parting  with  money  in  the  face  of  resolutions  to  save  it. 

To  encourage  savings,  it  is  important  that  there 

should  be  abundant  opportunities  for  laying  them  by 

where  they  will  be  safe,  and  at  the  same  time  beyond 

immediate  reach  for  the  gratification  of  passing  de- 

2 


10  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

sires.  To  secure  this  opportunity,  there  should  be 
in  every  town  savings  institutions  of  some  kind,  where 
the  wage- worker  can  deposit  his  savings  at  frequent 
intervals,  and  allow  them  to  accumulate,  and  where 
interest  or  profits  upon  the  accumulation  shall  be  add- 
ed to  them  from  time  to  time. 

The  wage-earner  will  be  more  liable  to  withstand 
the  temptation  to  spend  his  money  if  he  has  under- 
taken to  save  a  definite  sum  each  week  or  month,  and 
deposit  it  at  a  given  time,  than  he  will  if  the  amount 
and  the  time  of  depositing  are  left  uncertain.  Having 
undertaken  by  an  agreement  to  save  a  fixed  sum 
monthly  or  weekly,  and  deposit  it  at  a  certain  time  in 
•the  month  or  week,  he  will  have  a  definite  purpose  in 
view,  and  will  plan  to  carry  it  out.  An  act  of  this 
kind  by  one  artisan  or  clerk  tends  to  stimulate  his  as- 
sociates to  do  the  same,  and  the  example  of  each  will 
stimulate  others  in  the  good  work. 

Any  one  who  steadily  follows  a  course  of  saving 
forms  a  habit  of  great  importance  to  his  future  career. 
A  man  with  a  definite  object  before  him,  and  to  secure 
which  he  is  laboring,  if  it  be  a  worthy  one,  will  be  a 
better  man,  and  more  successful  in  his  undertakings, 
than  if  without  a  specific  aim  of  the  kind.  He  labors 
best  who  labors  to  attain  some  result  beyond  the  wages 
he  receives.  If  the  clerk  has  made  a  firm  resolve  to 
save  and  accumulate  his  savings  until  they  shall  amount 
to  one  thousand  dollars,  he  will  be  a  better  clerk  by 
virtue  of  this  resolution.  His  task  will  grow  easy  as 
he  pursues  his  aim,  the  first  hundred  dollars  saved 
being  the  hardest  to  secure. 

All  persons  concerned  in  savings  will  take  greater 
interest  in  their  mutual  endeavors  if  the  savings  insti- 


SOME   OF  THE  BENEFITS.  H 

tution  in  which  they  deposit  is  of  their  own  forming 
and  under  their  own  management,  provided,  of  course, 
that  the  system  upon  which  it  is  organized  and  con- 
ducted insures  the  safety  of  their  savings,  and  secures 
a  satisfactory  rate  of  interest  or  profits. 

Among  the  many  worthy  objects  which  the  wage- 
worker,  whether  artisan  or  clerk,  may  seek  to  attain 
pertaining  to  his  material  welfare,  none  will  exceed  in 
beneficial  results  the  determination  to  own  a  home. 
A  home  of  his  own  does  much  for  the  one  who  labors 
with  brain  or  muscle.  "  Home,  sweet  home,"  even  in 
song  and  melody,  has  softened  many  hearts  and  moist- 
ened many  eyes.  As  an  object  in  view  for  which  to 
labor,  it  has  warded  off  many  shafts  of  temptation, 
lightened  the  fatigue  of  toil,  and  filled  many  of  the 
hours  of  rest  with  pleasant  day-dreams.  A  man  who 
has  earned,  saved,  and  paid  for  a  home  will  be  a  better 
man,  a  better  artisan  or  clerk,  a  better  husband  and 
father,  and  a  better  citizen  of  the  republic. 

Every  influence  that  encourages  and  stimulates 
home-building  and  home-owning  works  good  to  the 
individual  and  to  society.  In  home-building,  as  in 
savings,  the  endeavor  of  one  in  that  direction  stimu- 
lates his  friends  and  his  neighbors.  When  several  are 
working  together,  they  become  a  center  from  which 
an  influence  radiates  throughout  the  community. 
Whenever  an  individual  has  set  a  home,  neat,  comfort- 
able, and  paid  for,  before  him  as  an  object  to  strive 
for,  and  has  steadily  pursued  his  resolve  to  save  his 
earnings  that  he  may  attain  his  purpose,  he  is  well 
started  toward  success  and  material  prosperity,  accord- 
ing to  the  measure  of  his  abilities.  The  greater  the 
number  of  such  persons  in  a  society  the  greater  will  be 


12  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

its  prosperity  and  the  higher  the  tone  of  its  morals. 
In  the  hands  of  citizens  such  as  these  the  destinies  of 
the  republic  will  be  safe. 

The  greater  number  of  those  who  commence  life 
without  the  aid  of  a  patrimony  do  not  fully  appreciate 
the  influence  and  importance  of  owning  a  home  until 
they  have  married  and  are  at  the  head  of  a  family. 
Their  home  is  a  rented  house,  or  rooms  in  a  tenement. 
Rent-day  comes  as  certain  as  the  seasons.  It  does  not 
stop  when  the  mill  or  manufactory  shuts  down;  it 
takes  no  account  of  sickness  and  doctors'  bills,  baby 
outfits  or  nurses  ;  it  does  not  adapt  its  exactions  to  the 
varying  prices  of  meat  or  flour.  If  not  paid  the  no- 
tice comes,  "  move  out " ;  and  if  the  tenant  does  not 
move  or  pay,  the  sheriff  comes  quickly  to  compel  it. 

There  is  no  pride  in  caring  for,  improving,  or  beau- 
tifying a  rented  house — shall  I  say  home  ?  No,  it  is 
not  a  home  ;  it  is  but  a  stopping-place,  a  structure  to 
ward  off  the  winds  and  the  storms.  No  tendrils  of 
heart  affection  cling  to  it.  It  is  all  the  same  to  the 
tenant  if  he  move  to  another  house  the  next  month, 
except  for  the  expense. 

How  often  such  a  family  wish  for  a  home  of  their 
own !  But  its  attainment  seems  so  impossible  that  no 
endeavor  to  secure  it  is  aroused.  There  are  many  of 
these  that  would  make  the  endeavor  if  a  feasible  way 
were  pointed  out.  If  by  some  means  the  sum  they  pay 
in  rent  could  be  applied  in  payment  for  a  home,  they 
would  gladly  avail  themselves  of  the  opportunity. 

If,  instead  of  making  large  payments,  they  could 
pay  in  monthly  payments,  and  at  the  same  time  not 
pay  more  for  the  home  than  its  fair  value,  the  advan- 
tage would  be  greater,  and  increase  the  chances  of  ulti- 


SOME  OF  THE  BENEFITS.  13 

mate  success.  All  members  of  the  family  could  unite 
in  the  good  undertaking,  and  new  hope  and  incentive 
to  labor  would  lighten  present  toil,  and  make  more 
easy  self-denying  frugality. 

Just  these  advantages  and  opportunities  for  secur- 
ing a  home  the  institution  for  savings  in  every  busi- 
ness center  should  afford.  It  may  be  asked  :  How  can 
it  give  such  opportunity  if  conducted  upon  business 
principles  such  as  will  make  it  a  safe  place  for  sav- 
ings ?  Let  us  explain.  The  safest  loan  for  a  savings 
institution  is  a  first  mortgage  upon  real  estate,  pro- 
vided the  amount  loaned  does  not  exceed  a  certain 
percentage  of  the  fair  market  price  of  the  real  estate 
loaned  upon.  What  that  percentage  should  be,  to 
insure  safety,  depends  upon  several  conditions,  viz. : 

1.  Whether  the  real  estate  is  principally  land,  or  its 
principal   value  arises  from   the  buildings  upon   it. 

2.  Whether,  at  the  time  of  the  loan,  the  land  has  an 
inflated  or  speculative  market  value,  or  is  depressed  in 
its  fair  value  by  business  stagnation.     3.  The  manner 
in  which  the  loan  is  to  be  repaid,  which  will  have 
great  influence  in  modifying  the  percentage  of  loan  as 
related  to  its  market  value.     If  the  time  of  payment 
is  deferred  for  a  long  term  of  years,  the  percentage  of 
the  loan  upon  the  market  value  must  be  much  less 
than  when  the  borrower  commences  to  repay  the  loan 
the  next  month  after  it  is  made,  and  continues  from 
month  to  month  to  make  such  payments  until  it  is 
wholly  repaid,  or,  what  is  the  equivalent  of  such  direct 
payment,  he  pays  into  the  savings   institution   each 
month,  in  addition  to  monthly  interest,  a  sum  which 
the  institution  holds  as  a  security  for  the  payment 
of  the  loan  in  addition  to  the  mortgage.     Under  these 

0*  THE  ^ 


14-  CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONS. 

conditions,  a  loan  made  upon  real  estate  that  is  safe 
at  the  time  of  the  loan — a  loan  such  as  could  be  real- 
ized by  an  immediate  foreclosure — is  likely  to  remain 
safe  by  reason  of  the  increased  security  given  from 
month  to  month. 

How  shall  the  one  who  desires  to  pay  for  his  home 
become  a  safe  borrower  ?  Let  us  assume  that  seventy- 
five  per  cent  of  the  cash  market  value  would  be  a  safe 
investment  for  the  savings  institution  at  the  time  of 
making  the  loan,  in  cases  where  it  was  to  be  paid  in 
monthly  payments,  and  interest  payable  monthly.  If 
the  borrower  has,  to  commence  with,  a  margin  of 
twenty-five  per  cent  on  the  value  of  the  home  he  de- 
sires to  purchase,  he  can  buy  at  once,  pay  the  margin, 
and  borrow  the  seventy-five  per  cent  from  the  savings 
institution,  mortgage  to  them,  and  make  his  monthly 
payment  until  all  is  paid  for. 

If  he  has  not  the  margin  of  twenty-five  per  cent  to 
commence  with,  then  he  must  commence  to  save  his 
earnings,  and  deposit  them  monthly  or  weekly  until 
the  deposits  so  made,  with  the  addition  of  the  interest 
or  profits  upon  them,  amount  to  the  original  margin ; 
then  he  can  buy,  make  his  mortgage  to  the  association, 
and  proceed  to  pay  for  his  home  in  monthly  payments 
— these  monthly  payments  not  much  exceeding  in 
amount  the  sum  he  was  paying  for  rent.  In  a  few 
years  the  home  will  be  paid  for,  free  of  all  incum- 
brance. 

Another  advantage  is  offered  by  the  co-operative 
savings  and  loan  associations :  It  frequently  happens 
that  a  member  may  want  to  borrow  a  sum  for  which 
he  has  no  real  estate  to  offer  as  security.  He  has 
shares  in  the  association  upon  which  he  has  been 


SOME  OF  THE  BENEFITS.  15 

paying  promptly  for  many  months.  He  lias  friends 
who  are  willing  to  indorse  for  him,  but  their  indorse- 
ments might  not  be  thought  good  at  the  bank  or  with 
the  money  leaner.  Moreover,  he  wants  the  loan  on  a 
basis  that  will  enable  him  to  repay  in  monthly  install- 
ments. His  friend  or  friends  also  hold  shares  in  the 
association,  and  have  no  present  use  for  the  money 
accumulated  in  the  association  upon  their  shares. 
They  are  using  it  simply  as  a  savings  institution. 
They  have  confidence  in  their  friend  who  wants  to 
borrow,  and  are  willing  to  pledge  their  shares  to  the 
association  as  a  collateral  security  for  the  repayment 
of  the  loan.  They  can  do  so,  if  the  amount  paid  in 
upon  all  the  shares  thus  pledged  exceeds  the  amount 
of  the  loan.  This  makes  the  association  absolutely 
secure,  and  places  the  borrower  in  the  best  condition 
possible  for  repaying  his  loan. 

We  have  endeavored  in  this  chapter  to  outline 
some  of  the  benefits  resulting  from  co-operative  sav- 
ings and  loan  associations.  We  have  studiously  avoid- 
ed portraying  them  in  vivid  colors.  Many  benefits 
will  accrue  from  them  that  we  have  not  mentioned. 
Many  other  co-operations,  through  their  instrumental- 
ity, will  be  made.  The  members  will  become  trained 
in  business  habits  and  methods;  accumulations  will 
be  made,  which  may  be  joined  together  in  business 
co-operations.  Not  least  among  their  manifold  bene- 
fits is  the  stimulus  they  will  give  to  endeavors  of  tem- 
perance, industry,  and  frugality. 


CHAPTER  III. 

TYPICAL   "CO-OPERATIVE   SAVINGS  AND   LOAN   ASSO- 
CIATIONS." 

THE  purpose  of  the  present  chapter  is  to  give  a 
general  outline  of  the  scheme  upon  which  co-operative 
savings  and  loan  associations  are  conducted.  There 
are  so  many  modifications  of  the  general  scheme  that  an 
attempt  to  refer  to  them  all  would  confuse  the  reader. 
A  particular  class  has  therefore  been  selected,  a  class 
that  is  typical,  and  involves  the  fundamental  princi- 
ples of  all.  In  a  subsequent  chapter  we  shall  point  out 
the  important  divergencies  from  this  typical  form. 

The  Legislature  of  the  State  of  New  York,  in  1887, 
passed  an  act  entitled  "  An  act  providing  for  the  for- 
mation of  co-operative  savings  and  loan  associations." 
It  is  known  as  Chapter  556  of  the  Session  Laws  of 
1887.  We  shall  select  the  scheme  which  this  act  em- 
bodies for  our  general  outline.  We  do  so  because  we 
believe  it  embodies  the  true  principles  upon  which 
this  form  of  co-operation  should  be  conducted. 

Co-operative  savings  and  loan  associations  are  cor- 
porations. Every  member  of  an  association  is  a  stock- 
holder, and  holds  a  certificate  of  stock,  stating  the 
number  of  shares  owned  by  him. 

In  an  ordinary  business  corporation  the  stockholder 


TYPICAL  ASSOCIATIONS.  17 

buys  his  stock  and  pays  its  fall  value  at  the  beginning 
of  his  membership,  making  no  further  payment  upon 
it  while  he  owns  it.  He  buys  it  as  an  investment,  and 
his  profits  from  the  investment  come  in  the  form  of 
dividends  from  time  to  time.  If  the  business  of  the 
corporation  is  successful,  and  gives  promise  of  large 
and  steady  dividends  in  the  future,  the  value  of  the 
shares  advance  ;  and  the  reverse  will  occur  if  no  divi- 
dends are  paid,  and  the  outlook  for  the  success  of  the 
enterprise  in  the  future  is  foreboding. 

In  the  co-operative  savings  and  loan  association 
the  stockholder  pays  only  one  dollar  when  he  buys  a 
share  of  stock,  except  under  circumstances  hereafter 
explained,  and  then  continues  to  pay  one  dollar  each 
month  upon  it  to  the  association,  until  the  small  sums 
thus  paid,  increased  by  the  dividends  added  to  them 
by  the  association,  amount  to  the  sum  of  two  hundred 
dollars.  When  this  amount  is  reached  the  stockholder 
surrenders  his  share  of  stock  and  the  association  pays 
him  two  hundred  dollars  in  one  sum. 

The  one  dollar  which  is  paid  in  each  month  is  called 
dues,  and  when  the  share  has  reached  the  value  of  two 
hundred  dollars  it  is  called  a  matured  share.  It  rep- 
resents two  hundred  dollars  of  accumulated  savings. 
Thus  it  appears  clearly  that  the  capital  of  the  associa- 
tion consists  of  the  accumulated  savings  of  its  mem- 
bers, paid  to  the  association  upon  shares  of  stock,  and 
increased  by  interest  which  the  association  has  re- 
ceived from  loans  made  by  it  from  the  savings  of  its 
members  thus  paid  to  the  association,  and  from  other 
minor  sources  of  income.  It  follows  that  the  amount 
of  the  capital  of  the  association  will  vary  from  month 
to  month  and  year  to  year. 


18   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

The  stock  of  the  association  is  issued  in  series. 
The  first  stock  issued  is  series  No.  1 ;  the  next,  series 
No.  2,  and  so  on  during  the  life  of  the  association.  It 
is  usual  to  issue  a  new  series  at  the  beginning  of  each 
fiscal  year.  All  stock  issued  during  the  fiscal  year  will 
belong  to  that  series.  After  a  new  series  is  issued  no 
stock  will  be  issued  in  a  prior  series. 

All  persons  taking  shares  of  stock  at  the  first 
monthly  meeting  in  the  year  will  pay  at  the  time  of 
getting  their  shares  one  dollar  dues  on  each  share. 
Persons  taking  shares  at  the  second  monthly  meeting 
will  pay  two  months'  dues.  If  obtained  at  the  fourth 
monthly  meeting,  four  dollars  dues  will  have  to  be  paid. 
Stocks  taken  out  after  the  sixth  monthly  meeting,  in 
addition  to  paying  dues  to  the  same  amount  they 
would  have  paid  if  they  had  taken  the  stock  at  the 
first  monthly  meeting,  are  charged  a  certain  amount 
of  interest,  the  amount  of  interest  being  usually  the 
same  as  that  which  the  association  pays  to  a  share- 
holder who  withdraws  from  the  association  after  he 
has  made  six  months'  payment  of  dues  and  before  the 
end  of  the  fiscal  year. 

The  reason  for  charging  dues  upon  all  stock  issued 
during  the  fiscal  year,  the  same  as  the  shareholder  pays 
if  he  takes  his  stock  at  the  first  meeting  in  the  year,  is 
to  make  the  amount  of  dues  paid  to  the  association 
upon  each  share  issued  in  each  series  and  outstanding 
at  the  close  of  the  fiscal  year,  precisely  the  same,  so 
that  all  shareholders  in  the  series  are  entitled  to 
the  same  amount  of  dividend  in  the  distribution  of 
profits. 

A  distribution  of  profits  and  losses  should  be  made 
before  the  issuing  of  a  new  series.  Some  associations 


TYPICAL   ASSOCIATIONS.  19 

issue  semi-yearly  series,  and  even  quarterly  series.  To 
do  so  simply  requires  the  distribution  of  profits  and 
losses  to  be  made  before  the  issuing  of  a  new  series. 

We  have  now  described  the  system  as  to  a  share- 
holder who  continues  to  pay  his  dues  until  his  share 
of  stock  has  reached  the  value  of  two  hundred  dollars, 
when  his  accumulated  savings  are  paid  to  him  and  he 
surrenders  his  stock.  But  suppose  that  at  any  time 
before  such  matured  value  is  reached  the  shareholder 
finds  himself  unable  to  continue  the  payment  of  his 
dues,  or  he  wishes  to  use  the  money  he  has  already  ac- 
cumulated, or  for  any  other  cause  desires  to  withdraw 
from  the  association  !  What  then  ? 

Every  share  of  stock  outstanding  has  upon  the 
books  of  the  association  a  holding  value  and  a  with- 
drawal value.  The  holding  value  is  made  up  of  all 
the  dues  that  have  been  paid  in,  plus  all  the  profits 
that  have  been  added  in  the  distribution  of  profits. 
The  withdrawal  value  is  the  sum  which  the  association 
will  pay  to  the  shareholders  who  withdraw  before  their 
stock  has  reached  its  matured  value. 

It  is  not  customary  to  allow  the  withdrawing  share- 
holder all  the  profits  which  have  been  added  to  his  stock 
in  determining  its  holding  value.  Some  portion  of  them 
is  usually  retained  by  the  association.  When  no  part 
is  retained,  the  holding  and  the  withdrawal  value  will 
be  the  same.  Each  association  determines  for  itself 
what  portion,  if  any,  of  the  profits  it  will  retain  from 
the  withdrawing  shareholder.  The  share  of  the  profits 
retained,  deducted  from  the  holding  value,  will  give 
the  withdrawal  value.  In  some  associations  the  by- 
laws prescribe  a  certain  definite  percentage  of  the 
profits  to  be  retained ;  in  other  associations  the  board 


20  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

of  directors  are  empowered  by  the  by-laws  to  determine 
from  time  to  time  what  this  percentage  shall  be. 

In  some  associations  the  withdrawal  value  of  each 
share  of  stock  is  determined  at  each  distribution  of 
profits,  that  is,  at  the  same  time  the  holding  value  is 
declared.  The  withdrawal  value  thus  declared  will 
continue  until  the  next  distribution  of  profits.  Shares 
withdrawn  at  any  time  after  such  declaration  of  their 
withdrawal  value  and  before  the  next  distribution  of 
profits  will  have  added  to  such  declared  withdrawal 
value  any  dues  paid  and  a  certain  rate  of  interest  on 
such  dues  and  on  the  withdrawal  value  as  declared 
down  to  the  time  of  their  withdrawal.  This  rate  of 
interest  should  be  fixed  by  the  by-laws. 

All  associations  require  at  least  thirty  days'  notice 
of  a  desire  to  withdraw,  before  the  association  becomes 
liable  to  pay.  Only  a  certain  portion  of  the  receipts 
of  the  association  are  applicable  to  paying  off  with- 
drawing shareholders  without  the  consent  of  the  di- 
rectors. In  associations  that  have  no  matured  shares 
calling  for  payment,  one  half  of  the  receipts  are  ap- 
plicable to  the  payment  of  withdrawals ;  and  only  one 
third,  when  they  have  matured  shares  awaiting  pay- 
ment. 

When  the  demands  of  withdrawing  shareholders 
exceed  the  funds  applicable  to  their  payment,  they  are 
paid  in  the  order  in  which  their  notices  of  withdrawal 
were  filed  with  the  secretary  of  the  association. 

Only  one  third  of  the  receipts  are  applicable  to  the 
payment  of  matured  shares  without  the  consent  of  the 
directors;  and  when  the  funds  are  not  sufficient  to 
pay  all  matured  shares  at  once,  the  directors  deter- 
mine in  what  order  they  shall  be  paid ;  and,  from 


TYPICAL  ASSOCIATIONS.  21 

the  time  they  reach  their  matured  value  until  paid, 
they  draw  a  certain  rate  of  interest,  determined  by  the 
by-laws.  The  object  of  thus  apportioning  the  receipts 
is  always  to  have  a  certain  part  of  them  to  satisfy  the 
wants  of  shareholders  desiring  to  borrow. 

Shares  of  stock  which  have  not  been  pledged  to 
the  association  for  a  loan  are  called  unpledged,  or 
"  free  "  shares.  Shares  that  have  been  pledged  to  the 
association  are  called  "  pledged,"  or  "  borrowed " 
shares. 

For  the  purpose  of  preventing  a  few  heavy  share- 
holders from  obtaining  and  holding  control  of  the 
association,  the  number  of  free  shares  which  any  one 
shareholder  can  hold  is  limited  to  ten  in  any  one  series, 
and  the  number  of  borrowed  shares  to  twenty. 

It  is  customary  to  charge  what  is  known  as  an  en- 
trance fee,  not  exceeding  twenty-five  cents  on  each 
share  of  stock  issued.  Its  object  is  to  aid  in  defraying 
expenses. 

All  shareholders  sign  the  by-laws  upon  taking 
shares  of  stock.  They  may  sell  their  shares  of  stock, 
if  unpledged,  to  any  person,  and  upon  such  transfer 
being  made  upon  the  books  of  the  association,  and  the 
transferee  signing  the  by-laws,  he  will  become  a  share- 
holder in  the  association.  A  transfer  fee  not  exceed- 
ing twenty-five  cents  a  share  is  usually  charged  by  the 
association. 

All  dues  upon  stocks  are  paid  to  the  association  at 
a  regular  stated  time  in  each  month.  A  committee  of 
the  board  of  directors  receive  these  dues,  and  receipt 
for  them  in  a  pass-book  which  is  issued  to  each  share- 
holder. When  the  hour  has  passed  for  receiving  dues, 
they  pass  the  receipts  of  the  evening  over  to  the  treas- 


22  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

urer  of  the  association,  and  take  his  receipt  therefor. 
All  interest  upon  loans  made  by  the  association  is  paid 
in  monthly  installments,  and  paid  at  the  same  time 
with  the  dues ;  in  short,  all  the  receipts  of  the  associa- 
tions come  in  at  the  stated  meetings  each  month.  No 
officer  has  the  right  to  receive  funds  for  the  associa- 
tion except  at  the  stated  meetings,  except  that  the 
treasurer  may  receive  payment  of  loans  at  any  time ; 
but,  when  not  paid  at  such  a  meeting,  interest  has  to 
be  paid  upon  the  loan  until  the  next  stated  meeting. 

For  the  purpose  of  securing  prompt  payment  of 
dues  and  interest,  the  association  imposes  a  fine,  not  ex- 
ceeding ten  per  cent  of  the  amount  of  dues  or  interest 
defaulted.  The  amount  of  the  fine  is  fixed  by  the  by- 
laws. 

The  funds  of  the  association  are  loaned  only  to  its 
shareholders.  The  loans  are  usually  made  in  sums  of 
two  hundred  dollars,  the  value  of  a  matured  share,  or 
a  multiple  thereof.  Some  associations,  however,  make 
the  minimum  limit  of  a  loan  fifty  dollars,  or  one 
fourth  of  the  matured  value  of  a  share ;  and  the  next 
grade  in  amount  one  hundred  dollars,  or  one  half  a 
share. 

Every  shareholder  has  the  right  to  become  a  bor- 
rower, upon  giving  the  required  security,  to  an  amount 
equal  to  the  matured  value  of  the  shares  owned  by 
him.  Thus,  if  he  owns  ten  shares,  he  may  become  a 
borrower  to  the  extent  of  two  thousand  dollars. 

While  all  shareholders  have  the  right  to  become 
borrowers,  all  will  not  want  to  borrow  at  the  same 
time ;  but  it  will  often  occur  that  there  will  not  be 
sufficient  money  to  meet  the  wants  of  all  who  do  wish 
to  borrow.  As  all  who  have  adequate  security  to  offer 


TYPICAL  ASSOCIATIONS.  23 

stand  on  equal  ground,  it  becomes  an  important  ques- 
tion, relating  to  the  harmonious  workings  of  the  asso- 
ciation, to  determine  in  what  manner  the  first  right  to 
a  loan  from  the  funds  of  the  association  shall  be  de- 
cided. The  common,  and  we  believe  the  most  equita- 
ble and  satisfactory  mode  is  to  decide  it  by  an  open 
bidding  of  a  premium — the  one  bidding  the  highest 
premium  to  have  the  money ;  in  short,  awarding  the 
loan  or  loans  to  the  highest  bidder  or  bidders. 

Upon  the  subject  of  the  kind  of  premium  bid  and 
how  paid,  there  is  great  divergence  in  the  "  building 
associations,"  "  co-operative  banks,"  "  mutual  loan 
associations,"  etc.  We  can  not  stay  to  explain  them 
at  this  time — it  would  confuse  rather  than  otherwise. 
We  will  describe  the  scheme  at  this  time  of  the  co- 
operative savings  and  loan  associations  of  New  York. 
It  already  appears  that  the  value  of  a  matured  share, 
two  hundred  dollars,  is  the  unit  in  all  loans.  If  the 
loan  is  less  than  two  hundred  dollars,  it  is  a  definite 
fractional  part,  one  fourth  or  one  half  of  that  sum. 
So  that  the  language  of  the  borrower,  when  stating 
how  much  money  he  wants  to  borrow,  describes  it  by 
naming  "  one  share,"  if  he  wants  to  borrow  two  hun- 
dred dollars ;  "  five  shares  "  if  he  wants  to  borrow  one 
thousand  dollars;  "one  quarter  of  a  share"  if  he 
wants  to  borrow  fifty  dollars,  etc.  This  is  simple, 
when  the  premium  bid  is  so  much  a  share ;  it  is  read- 
ily understood  and  the  amount  is  easily  computed  by 
all  interested.  Thus,  if  there  are  two  thousand  dollars 
to  loan  and  two  or  more  shareholders  want  it,  the  proper 
officer  offers  the  money  for  sale  :  A  bids  "  fifty  cents," 
B  "seventy-five  cents";  A  raises  his  bid  to  "one 
dollar  " ;  if  no  one  bids  above  him,  the  money  is  struck 


24  CO-OPERATIVE   SAYINGS   AND   LOAN  ASSOCIATIONS. 

off  to  him.  The  premium  he  has  agreed  to  pay  for 
the  loan  is  one  dollar  per  share.  If  the  number  of 
shares  he  is  borrowing  is  ten,  the  total  premium  is  ten 
dollars,  and  the  total  amount  of  money  he  will  receive 
will  be  two  thousand  dollars,  less  the  premium.  Al- 
though he  receives  but  nineteen  hundred  and  ninety 
dollars,  he  will  give  a  security  for  two  thousand,  and 
pay  interest  on  that  sum.  The  "  premium  per  share  " 
retained  passes  to  the  profit-and-loss  account  of  the 
association. 

When  there  is  no  competition  for  the  money  the 
borrower  will  simply  bid  "  par,"  and  no  one  raising  his 
bid,  he  will  be  awarded  the  money,  and  will  receive 
the  full  sum  of  two  hundred  dollars  per  share.  Under 
this  system  the  only  purpose  of  bidding  a  premium  is 
to  decide  who  shall  have  the  money  when  several  de- 
sire it.  The  securities  received  by  the  association,  in 
fact,  call  for  the  payment  of  the  principal  sum  named 
therein,  and  interest  upon  the  same ;  and  the  whole 
subject  of  premium  is  closed  when  the  loan  is  perfected. 
We  shall  explain  the  other  systems  of  premiums  in  a 
subsequent  chapter. 

Immediately  following  the  receipt  of  dues  and 
interest  at  each  stated  monthly  meeting,  all  the  funds 
of  the  association  that  can  be  loaned  at  that  meeting 
are  offered  to  borrowers,  and  bids  therefor  invited. 
The  person  or  persons  to  whom  a  loan  or  loans  are 
awarded  at  once  submits  a  statement  of  the  securities 
proposed.  At  once  following  the  sale  of  money  to 
borrowers,  the  directors  hold  their  regular  monthly 
meeting  for  the  transaction  of  the  business  of  the 
association.  The  directors  have  power  to  pass  upon 
the  securities  at  their  meeting,  but  the  usual  course 


TYPICAL   ASSOCIATIONS.  25 

is  to  refer  them  to  the  finance  committee.     This  mode 
is  always  pursued  in  reference  to  real-estate  security. 

The  form  and  kind  of  securities  required  by  the 
associations  are  as  follows  : 

1.  In  all  cases  a  bond  conditioned  upon  the  pay- 
ment of  the  loan  and  the  interest  thereon,. according 
to  the  provisions  of  the  scheme  of  the  association. 

2.  In  all  cases  also  the  assignment  to  the  associa- 
tion of  the  shares  of  stock  borrowed  upon,  as  collateral 
security  for  the  payment  of  the  loan. 

3.  A  first  mortgage  upon  unincumbered  real  estate, 
containing  the  same  conditions  as  the  bond  and  col- 
lateral thereto. 

4.  Or  in  lieu  of  the  mortgage,  other  shares  of  stock 
of  the  association  may  be  pledged,  provided  their  with- 
drawal value,  added  to  the  withdrawal  value  of  the 
shares  borrowed  upon,  shall  exceed  the  amount  of  the 
loan,  and  interest  thereon,  for  six  months.     This  gives 
absolute  security — the  association  having  the  money 
with  which  to  make  good  the  loan  in  case  of  default 
by  the  borrower. 

A  loan  secured  by  a  pledge  of  shares  is  known  as  a 
stock  loan  ;  and  when  secured  by  a  mortgage  on  real 
estate,  as  a  mortgage  loan. 

In  associations  where  the  premium  bid  is  per  share, 
as  before  described,  the  rate  of  interest  charged  is  six 
per  cent  per  annum,  payable  in  monthly  installments. 
The  interest  on  a  share  for  one  month  is  one  dollar. 

To  illustrate  the  simplicity  of  this  scheme,  suppose 
A  to  be  the  owner  of  five  shares,  upon  which  he  is 
paying  his  monthly  dues,  amounting  to  five  dollars. 
He  becomes  a  borrower  to  the  extent  of  one  thousand 
dollars,  securing  the  same  by  pledging  his  five  shares, 
8 


28   CO-OPERATIVE   SAVINGS   AND   LOAN  ASSOCIATIONS. 

and  a  mortgage  upon  real  estate.  The  interest  upon 
each  share  of  his  loan — two  hundred  dollars — is  one 
dollar  a  month,  or  five  dollars  on  the  five  shares ;  his 
dues  are  five  dollars,  making  his  monthly  payment 
to  the  association  ten  dollars.  If  he  continue  paying 
five  dollars  dues  on  his  stock,  and  five  dollars  interest 
on  his  loan  until  his  stock  has  reached  its  matured 
value — the  sum  of  one  thousand  dollars — the  value  of 
his  stock  becomes  the  equivalent  of  his  loan,  and  they 
balance  each  other.  He  surrenders  his  stock,  and  the 
association  cancels  his  securities. 

The  safety  to  the  association  of  the  security  of  a 
loan,  constantly  increases  from  the  next  meeting  after 
the  loan  is  made,  by  the  increasing  value  of  the  shares 
borrowed  upon,  from  the  payment  of  dues  thereon. 
But  the  borrower  is  not  obliged  to  retain  his  loan  until 
his  shares  of  stock  reach  their  matured  value.  He 
may  repay  his  loan  in  full  at  any  time,  or  one  share 
thereof.  If  he  so  pays,  except  at  a  stated  monthly 
meeting,  he  must  pay  interest  up  to  the  next  meeting. 
When  he  has  paid  his  loan  in  full,  his  shares  will  be 
released  from  the  pledge  for  the  loan,  and  he  will  hold 
them  again  as  unpledged  or  free  shares. 

But  instead  of  paying  his  loan  in  full,  and  still  re- 
taining his  shares  of  stock,  he  may  wish  to  have  their 
value  applied  in  part  payment  of  the  loan.  In  that 
event  he  will  apply  at  a  stated  monthly  meeting,  and 
give  proper  notice  of  his  desire  to  pay  his  loan  and 
have  the  shares  borrowed  upon  applied  in  part  pay- 
ment. Their  withdrawal  value  will  be  allowed  to  him 
upon  his  paying  the  balance  of  the  loan,  and  his  shares 
of  stock  will  be  canceled,  and  the  association  will  sur- 
render his  bond  and  give  a  discharge  of  the  mortgage. 


TYPICAL  ASSOCIATIONS.  27 

But  suppose  a  borrower  from  any  cause  does  not 
keep  up  the  payment  of  his  dues  and  interest.  What 
then?  When  he  becomes  six  months  in  arrears  for 
interest  and  dues  or  either,  the  whole  loan  becomes 
due  at  once,  at  the  option  of  the  directors,  and  the 
association  may  commence  an  action  to  foreclose  upon 
the  securities.  In  this  action  the  withdrawal  value 
of  the  shares  borrowed  upon,  at  the  time  of  commenc- 
ing the  action,  will  be  applied  upon  the  debt,  and  the 
stock  canceled,  and  the  decree  taken  for  the  balance. 
The  usual  and  ordinary  procedure  of  the  courts  in  such 
cases  controls  the  case  thereafter. 

The  associations  may  become  purchasers  at  a  pub- 
lic or  private  sale  of  any  real  estate  upon  which  they 
have  a  lien,  or  in  which  they  have  any  interest,  and 
thereafter  to  hold,  lease,  mortgage,  or  sell  the  same,  as 
any  individual  might  do.  If  for  any  cause  at  a  sale  of 
the  mortgaged  premises  in  the  foreclosure  action  a 
sufficient  sum  is  not  bid  for  the  premises  to  satisfy  the 
costs  and  mortgage  claim,  a  judgment  for  any  de- 
ficiency may  be  taken  against  the  borrower  upon  his 
bond. 

We  now  come  to  the  subject  of  the  distribution  of 
profits. 

The  gross  profits  of  the  association  will  consist  of 
interest,  premiums,  share  of  profits  left  by  withdraw- 
ing shareholders,  fines,  transfer  and  entrance  fees. 
The  principal  item,  of  course,  will  be  interest. 

Under  the  system  we  are  outlining  premiums  will 
not  usually  amount  to  a  large  sum.  It  is  not  desirable 
that  they  should,  because  large  premiums  mean  that 
the  borrower  will,  in  effect,  pay  large  interest;  and, 
when  he  does  so,  it  works  injustice  as  between  the  bor- 


28   CO-OPERATIVE  SAVINGS  AND  LOAN   ASSOCIATIONS. 

rower  and  the  holder  of  free  shares,  by  giving  to  the 
latter  large  profits  at  the  expense  of  the  former.  Of 
this  we  shall  speak  more  at  length  hereafter.  Dues 
paid  can  not,  of  course,  be  reckoned  as  profits ;  they 
are  capital. 

For  the  purpose  of  illustration,  we  will  first  describe 
the  distribution  of  profits,  at  the  close  of  the  first  fiscal 
year,  in  an  association  which  issues  a  yearly  series  only. 
The  expenses  of  conducting  the  business  should  always 
be  paid  in  full  up  to  the  time  when  the  distribution  is 
made.  We  will  assume  the  association  has  issued  dur- 
ing the  year  eleven  hundred  shares  of  stock ;  that 
some  of  these  have  been  withdrawn,  so  that  at  the  end 
of  the  fiscal  year  only  one  thousand  shares  are  out- 
standing. Upon  each  of  these  shares  there  has  been 
paid  during  the  year  twelve  dollars  in  dues,  making 
the  total  upon  all  the  shares  twelve  thousand  dollars. 
It  may  prove  that  the  dues  are  in  arrears  on  some 
shares ;  if  so,  the  amount  so  in  arrears,  and  fines  there- 
on, should  be  treated  as  an  asset,  because  it  is  a  sum 
due  the  association,  and  will  be  paid.  The  assets  of  the 
association  will  consist  of  loans,  for  which  it  holds  se- 
curities, cash  on  hand,  dues,  interest  in  arrears,  and  fines 
accrued  thereon.  The  sum  of  these  will  constitute  the 
assets  on  hand ;  but,  to  be  absolutely  accurate  and  just 
in  the  distribution,  there  is  another  item  that  should 
be  included  in  the  assets  for  the  purpose  of  the  dis- 
tribution of  profits,  namely,  the  interest  on  the  loans 
for  the  last  month  of  the  fiscal  year,  which  will  not  be 
paid  until  the  first  meeting  of  the  new  fiscal  year — 
that  is,  the  fiscal  year  for  convenience  should  com- 
mence with  the  first  meeting  in  the  year  and  will  end 
at  the  beginning  of  the  first  meeting  in  the  next  fiscal 


TYPICAL   ASSOCIATIONS.  29 

year.  The  interest  paid  at  the  first  meeting  of  the 
next  fiscal  year  accrued  during  the  last  month  of  the 
old  fiscal  year,  and  should  be  counted  among  the  assets 
of  that  year  in  ascertaining  the  exact  profits  of  the 
year.  Adding  the  interest  upon  the  loans  to  be  paid 
at  the  next  meeting  to  the  assets  above  named,  we  have 
the  total  assets  for  the  purpose  of  distribution.  De- 
duct the  twelve  thousand  dollars  liability  for  dues 
paid,  which  constitutes  in  fact  the  capital  of  the  asso- 
ciation, and  the  remainder  will  show  the  net  profits  of 
the  year's  business.  Now,  if  we  divide  this  net  profit 
by  the  number  of  shares  outstanding,  viz.,  one  thou- 
sand, the  quotient  will  be  the  sum  that  should  be 
added  to  each  share  as  a  dividend  in  the  distribution 
of  profits. 

This  is  a  simple  method,  but  another  method  may 
be  pursued,  viz.,  dividing  the  net  profits  by  the  total 
amount  of  the  capital — namely,  the  twelve  thousand 
dollars — and  the  quotient  will  then  be  the  percentage 
to  be  added  to  each  dollar  of  the  capital  as  a  dividend. 
In  case  of  an  association  having  several  series  out- 
standing at  the  time  of  the  distribution,  this  method 
must  be  followed.  When  the  dividend  has  been  added 
to  the  twelve  dollars  of  dues  paid  during  the  year, 
their  sum  constitutes  the  "  holding  value "  of  each 
share  of  stock  at  the  beginning  of  the  next  fiscal  year, 
and  the  sum  of  such  "  holding  value  "  of  all  the  shares 
will  constitute  the  capital  of  the  association  at  the  be- 
ginning of  the  next  year.  In  this  distribution  we  have 
assumed  that  there  were  no  liabilities  except  the  capi- 
tal stock.  If  the  association  owes  borrowed  money, 
the  amount  would  be  treated  as  a  liability  in  making 
the  statement  to  find  the  net  profits  for  distribution. 


30   CO-OPERATIVE   SAVINGS  AND   LOAN   ASSOCIATIONS. 

"We  will  next  illustrate  the  distribution  of  profits  in 
an  association  issuing  a  yearly  series  at  the  end  of  its 
third  fiscal  year.  The  association  will  have  outstand- 
ing three  series  of  stock.  The  holding  value  of  each 
share  of  the  first  and  second  series  was  determined  at 
the  last  distribution  of  profits,  and  if  we  take  the  hold- 
ing value  of  one  share  in  the  first  series  and  multiply 
it  by  the  total  number  of  shares  outstanding  in  that 
series  at  the  end  of  the  third  fiscal  year,  we  have  the 
total  holding  value  of  the  first  series.  Performing  a 
like  operation  in  reference  to  the  outstanding  shares 
in  the  second  series,  we  ascertain  the  total  holding 
value  of  that  series  at  the  beginning  of  the  year.  By 
adding  together  these  two  results,  we  have  the  total 
holding  value  of  the  first  and  second  series,  which  con- 
stituted the  total  capital  of  the  association  at  the  begin- 
ning of  the  third  fiscal  year,  and  upon  which  monthly 
interest  has  been  received  during  the  year. 

Upon  each  of  these  shares  outstanding  at  the  close  of 
the  third  year  there  has  been  paid  twelve  dollars  of  dues. 
There  have  also  been  paid  twelve  dollars  of  dues  on  each 
share  outstanding  in  the  third  series  of  stock.  These 
dues  are  not  only  a  liability,  but  they  have  been  added 
to  the  capital,  and  are  entitled  to  share  in  the  profits, 
and  we  must  treat  them  in  this  double  aspect.  The 
treatment  of  them  as  a  liability  in  making  up  the  state- 
ment of  liabilities  and  assets  is  simple.  By  multiply- 
ing the  total  number  of  shares  outstanding  in  all  three 
series  by  twelve,  we  have  their  sum  total  as  a  liability. 
We  also  have  it  as  capital.  By  adding  their  sum  total  to 
the  total  holding- value  of  the  first  and  second  series  as 
above  found,  we  have  the  total  liability  of  the  associa- 
tion on  account  of  capital.  If  there  are  any  other 


TYPICAL  ASSOCIATIONS.  31 

liabilities  of  any  kind,  they  should  still  be  added  to 
this  total  for  the  purpose  of  making  the  statement  of 
liabilities  and  assets.  Having  ascertained  the  total 
liabilities,  the  next  step  is  to  ascertain  the  total  assets. 
These  will  usually  consist  of  securities  for  loans,  dues, 
interest,  fines  unpaid,  and  cash  on  hand.  As  ex- 
plained in  our  illustration  of  distribution  when  there 
was  but  one  series  of  stock  to  share  in  the  dividend, 
we  must  include  in  the  statement  of  assets,  to  be 
wholly  accurate,  the  interest  which  becomes  due  and 
payable  at  the  first  meeting  in  the  next  year.  This 
will  be,  of  course,  in  the  scheme  we  are  outlining  in 
this  chapter,  as  many  dollars  as  there  are  shares  bor- 
rowed upon.  In  addition  to  these  items,  we  should 
include  in  our  assets  the  fair  cash  value  of  any  real  es- 
tate or  other  property  that  the  association  may  chance 
to  own.  Having  ascertained  the  total  assets,  we  de- 
duct therefrom  the  total  liabilities,  and  the  remainder 
is  the  net  sum  of  the  profits  for  the  year  to  be  declared 
as  a  dividend  upon  the  capital. 

It  is  apparent  that  each  dollar  of  the  capital  repre- 
sented by  the  first  and  second  series  of  stock  is  entitled 
to  the  same  dividend.  It  has  been  invested  the  whole 
year.  That  part  of  the  capital  made  up  of  the  dues 
paid  during  the  year  has  not  been  invested  during  the 
whole  year.  It  has  been  paid  from  month  to  month 
during  the  year,  and  invested  from  the  time,  as  it  was 
received.  "We  must  find  what  sum  invested  for  a  year 
would  be  their  equivalent.  That  the  illustration  may 
be  simple  and  clear,  we  will  first  take  the  dues  paid 
upon  a  single  share,  viz.,  twelve  dollars.  The  first 
dollar  paid  at  the  beginning  of  the  year  has  been  in- 
vested twelve  months ;  the  next  dollar  eleven  months ; 


32   CO-OPERATIVE   SAVINGS   AND   LOAN   ASSOCIATIONS. 

the  next,  ten  months;  and  so  on  to  the  twelfth  dollar, 
which  has  been  invested  one  month.  Now  12  +  11  + 
10  +  9  +  8  +  7+6  +  54-4  +  3  +  2  +  1  =  78.  Thus 
we  find  that  the  twelve  dollars  received  and  invested 
during  the  year  in  monthly  installments,  each  install- 
ment being  paid  and  invested  at  the  beginning  of  each 
month,  is  equivalent  to  one  dollar  invested  for  seventy- 
eight  months;  and  one  dollar  invested  for  seventy- 
eight  months  is  equivalent  to  $6.50  invested  for  one 
year.  Multiplying  the  total  number  of  shares  out- 
standing in  all  the  series  by  $6.50,  we  have  a  sum 
which,  if  invested  for  the  whole  year,  would  produce 
the  same  income  that  the  total  dues  will  produce  when 
received  in  monthly  installments,  and  invested  from 
month  to  month.  By  adding  this  equated  sum,  ob- 
tained as  above  described,  to  the  total  value  of  the  first 
and  second  series,  we  have  the  total  sum  by  which  to 
divide  the  net  profits,  and  the  quotient  will  be  the 
dividend  percentage  to  be  made  upon  each  dollar  of 
the  capital  invested  during  the  whole  year. 

Taking  now  the  "  holding  value  "  of  a  share  in  the 
first  series  at  the  beginning  of  the  year,  and  multiply 
by  the  dividend  percentage  on  one  dollar,  and  we  have 
the  total  dividend  to  be  made  on  said  share,  except 
the  dividend  on  account  of  dues  paid  during  the  year. 
To  find  this,  we  will  multiply  $6.50  (the  reason  of 
which  was  above  explained)  by  the  dividend  percent- 
age, and  the  result  will  give  us  the  dividend  to  be 
made  on  account  of  the  dues  paid  in  during  the  year. 
Adding  together  the  holding  value  at  the  beginning  of 
the  year,  the  dividend  made  thereon,  the  dividend  on 
the  dues  paid  during  the  year,  and  the  dues  themselves, 
and  we  shall  have  the  holding  value,  which  is  also  the 


TYPICAL   ASSOCIATIONS.  33 

capital  value,  of  the  share  at  the  beginning  of  the 
fourth  fiscal  year.  Multiplying  this  value  of  one  share 
by  the  number  of  shares  in  the  first  series,  and  we  have 
the  total  holding  value  of  the  first  series  after  the  divi- 
dend has  been  added. 

Next  taking  a  share  of  the  second  series,  and  per- 
forming in  reference  thereto  the  same  operations  above 
given  in  reference  to  the  share  in  the  first  series,  and 
we  shall  obtain  the  same  result  in  reference  to  the  sec- 
ond series. 

In  reference  to  the  third  series,  we  simply  multiply 
$6.50  by  the  dividend  percentage,  and  add  the  result 
to  the  $12  of  dues,  and  their  sum  constitutes  the  hold- 
ing value  of  a  share  in  the  third  series  of  stock  at  the 
beginning  of  the  fourth  fiscal  year.  Multiplying  by 
the  total  number  of  shares  in  the  third  series,  we  have 
the  total  value  of  this  series.  Now,  adding  together 
the  totals  of  the  three  series,  we  shall  have  a  sum  equal 
to  the  sum  of  the  total  assets  with  which  we  started, 
if  our  computations  have  been  correct.  If  they  bal- 
ance, it  proves  the  correctness  of  the  computations.  If 
they  do  not  balance,  it  demonstrates  that  we  have  com- 
mitted errors,  and  must  find  them. 

The  procedure  here  outlined  is  applicable  to  a  dis- 
tribution of  profits  in  an  association  having  any  num- 
ber of  series  outstanding.  The  same  operations  are  to 
be  performed  with  reference  to  each  series,  except  the 
last  series,  which  have  been  described  with  reference 
to  the  first  and  second  series  of  stock  in  the  foregoing 
discussion ;  and  the  operations  with  reference  to  dues 
paid  during  the  year  upon  all  series  will  be  the  same 
as  above  described,  and  they  will  be  the  same  with 
reference  to  the  last  series.  The  same  operations  will 


34:  CO-OPERATIVE   SAVINGS   AND   LOAN   ASSOCIATIONS. 

also  be  pursued  in  case  of  a  half-yearly  or  quarterly 
series  scheme  in  the  distribution  of  profits  before  the 
issuing  of  a  new  series.  The  only  variation  will  be  in 
equating  the  monthly  payments.  The  equation  will 
have  to  be  made  for  the  shorter  term  instead  of  for 
one  year. 

In  ascertaining  the  dividend  percentage,  if  there  is 
a  small  fraction  it  is  often  advisable  not  to  use  it,  but 
carry  over  as  an  undivided  profit  the  sum  to  which  it 
would  amount.  In  the  foregoing  illustrations  we 
have  assumed  a  distribution  of  all  the  net  profits. 
Some  associations,  and  we  deem  it  a  wise  course  to 
pursue,  deduct  from  the  net  profits  a  small  percentage 
before  making  the  distribution  and  carry  it  over  as 
undivided  profits,  gradually  increasing  the  amount  thus 
carried  over  as  undivided  profits  from  year  to  year,  and 
thereby  making  what  may  be  properly  called  a  "  guar- 
antee fund " ;  and  if  any  losses  are  sustained  during 
the  year,  charge  them  up  against  this  fund,  thus  dis- 
tributing the  effect  of  any  loss  that  may  occur  in  such 
a  manner  as  not  to  impair  seriously  the  steady  distribu- 
tion of  a  fair  dividend  at  the  close  of  each  fiscal  year, 
or  before  a  new  series  is  issued. 

Upon  this  subject  we  refer  the  accountant  to  the 
ninth  chapter,  devoted  to  the  subject  of  "  How  to 
keep  Accounts." 

We  should  allude  to  the  liability  of  these  associa- 
tions to  suffer  loss.  We  know  of  no  business  under- 
taking, co-operative  or  otherwise,  free  from  all  liability 
of  loss. 

It  is  important  to  every  one  interested  in  the  sub- 
ject of  co-operative  savings  and  loan  associations  that 
he  should  understand  the  liability  of  loss  that  attaches 


TYPICAL   ASSOCIATIONS.  35 

to  the  scheme  in  its  practical  workings.  The  first 
liability  to  loss  is  one  common  to  every  corporation 
— the  possibility  that  the  officers  who  handle  the 
money  will  prove  dishonest  and  steal  the  funds.  In 
this  the  liability  in  these  associations  is  at  the  mini- 
mum. The  funds  received  by  the  association  are  re- 
ceived at  the  stated  meetings  by  the  committee  of  the 
directors;  one  of  their  number  has  receipted  in  the 
pass-books  of  the  members  for  all  received ;  another 
member  has  checked  the  amount  off  in  another  book 
where  it  was  charged  against  the  shareholder  at  the 
beginning  of  the  meeting;  a  third  has  counted  the 
money  as  received.  Immediately  at  the  close  of  the 
receipts,  they  balance  the  cash  received  with  the 
amount  checked  as  paid,  and  pass  the  cash  over  to  the 
treasurer,  and  take  his  receipt.  The  book  upon  which 
the  amounts  paid  have  been  checked  is  kept  by  the 
secretary.  The  total  receipts  of  the  evening  are  at 
once  reported  to  the  directors  at  their  meeting.  Loans, 
as  before  stated,  may  be  repaid  to  the  treasurer  at  any 
time.  At  no  time  will  a  large  sum  of  money  be  on 
hand  in  the  treasurer's  custody,  as  compared  with  the 
total  assets  of  the  association.  A  bond  is  required  of 
him,  much  larger  than  any  sum  that  will  be  in  his 
hands  at  any  one  time,  with  two  sureties  approved  by 
the  directors.  We  assert  there  is  no  business  con- 
cern handling  the  same  amount  of  money  in  which 
the  liability  for  loss  is  less  than  in  these  associations. 
No  moneys  can  be  paid  out  by  the  treasurer  except 
upon  the  order  of  the  directors,  which  order  must  be 
signed  by  the  president  and  secretary. 

The  next  liability  is  the  possibility  of  the  securities 
taken  for  loans  not  being  good,  and  the  full  amount 


36   CO-OPERATIVE   SAVINGS   AND   LOAN  ASSOCIATIONS. 

of  the  loan  not  being  realized  in  the  event  the  bor- 
rower defaults  in  paying  the  loan.  This  liability  is 
incident  to  the  savings-bank,  and  to  every  institution 
that  loans  money ;  but  here  again  we  assert  these  asso- 
ciations are  safer  than  any  other  scheme  for  savings  yet 
devised.  We  have  before  alluded  to  the  fact  that  all 
loans  made  upon  a  pledge  of  shares  of  stock,  the  with- 
drawal value  of  which  exceeds  the  amount  of  the  loan 
and  six  months'  interest  thereon,  were  perfectly  safe. 
As  an  association  advances  in  age,  the  percentage  of 
its  loans  thus  secured  will  increase.  Now  as  to  liability 
to  loss  on  mortgage  loans.  The  same  care  as  to  titles 
is  required  as  in  any  corporation  loaning  money  on  real- 
estate  security.  Whether  the  value  of  real  estate  of- 
fered is  sufficient  is  determined  usually  by  a  duly  ap- 
pointed committee  of  the  directors.  Every  one  of 
them  is  personally  interested  in  the  safety  of  the 
security  ;  his  reputation  is  also  at  stake  with  his  fellow 
shareholders  ;  he  receives  no  benefits  by  deciding  that 
the  real  estate  offered  is  a  sufficient  security  which  he 
would  lose  by  deciding  otherwise.  He  stands  in  a 
position  to  be  absolutely  unbiased,  except  that  his 
every  interest  is  in  the  direction  of  securing  only  a 
good  security.  His  judgment  may  be  at  fault,  but  the 
committee  consists  of  three  men ;  they  are  passing 
upon  the  value  of  real  estate  in  their  own  town ;  they 
know  its  market  value,  its  advantages  and  disadvan- 
tages. More  important  than  these  facts  is  the  one 
that  the  payment  of  the  loan,  except  as  to  a  part,  is 
not  long  deferred.  At  the  next  monthly  meeting  the 
borrower  begins,  in  effect,  paying  his  loan  ;  the  shares 
of  stock  borrowed  upon  are  increasing  in  value.  If 
the  loan  was  safe  at  the  time  it  was  passed,  the  chances 


TYPICAL   ASSOCIATIONS.  37 

are  very  small  that  it  will  ever  become  unsafe.  If  it 
was  an  unsafe  loan  at  the  time  when  passed  by  the 
committee,  it  will  constantly  grow  safer  so  long  as  the 
borrower  continues  the  payment  of  his  dues  and  inter- 
est. It  should  have  been  stated  before  that  these  asso- 
ciations make  loans  only  in  their  immediate  vicinity, 
so  that  many  shareholders  know  constantly  of  all  loans 
made,  and  all  may  know  who  desire.  Another  fact 
should  not  be  forgotten  in  this  connection,  that  the 
moral  risk  of  a  class  of  men  who  have  planned  for 
themselves  a  steady  course  of  saving,  or  the  paying  for 
a  home  by  monthly  savings,  is  far  above  the  average 
moral  risk  of  a  mortgage  in  the  usual  mode.  In  the 
event  of  the  association  having  to  l)id  in  a  parcel  of 
real  estate  to  secure  its  debt,  it  has  a  great  advantage 
in  selling  it  again,  by  getting  a  small  down  payment 
and  the  purchaser  becoming  a  shareholder  and  paying 
for  it  in  the  monthly  sums  upon  dues. 

For  the  foregoing  reasons  we  believe  the  scheme  of 
these  associations,  in  their  practical  workings,  is  more 
free  from  liability  of  losses  than  any  other  scheme  in 
operation. 

The  question  naturally  arises,  in  case  there  are  no 
borrowers,  what  then  ?  Such  a  contingency  will  sel- 
dom arise,  and,  if  it  does  occur  now  and  then,  it  will 
be  temporary  in  its  duration.  The  worst  result  from 
s.uch  a  contingency  is  a  failure,  for  the  time  being,  to 
make  profits;  the  principal  sum  of  dues  paid  is  not 
impaired.  The  scheme  of  the  association,  however, 
provides  for  such  a  contingency  if  it  arises  and  con- 
tinues, and  that  is  by  compelling  withdrawals  in  series 
that  have  attained  a  certain  age.  What  share  shall  be 
withdrawn  is  determined  by  lot,  the  shareholders  thus 


38   CO-OPERATIVE   SAVINGS  AND   LOAN  ASSOCIATIONS. 

compelled  to  withdraw  being  paid  the  "  holding  value  " 
of  their  shares.  It  is  very  seldom  in  the  experience  of 
these  associations  that  this  remedy  has  to  be  used.  In 
the  natural  course  of  business,  if  the  association  is  not 
making  fair  profits,  shareholders  will  begin  to  with- 
draw at  the  withdrawal  value  of  their  shares,  thereby 
leaving  such  portion  of  the  profits  which  have  been 
added  to  the  dues  paid  as  the  by-laws  of  the  associa- 
tion provide.  The  profits  thus  retained  help  to  in- 
crease the  profits  to  be  divided  at  the  next  distribution 
among  the  shares  that  remain  outstanding. 

There  can  not  be  anything  like  a  "run  upon  a 
bank  "  upon  one  of  these  associations ;  it  matters  not 
how  many  want  money  on  withdrawals,  each  share- 
holder must  wait  his  turn ;  he  must  give  the  thirty 
days'  notice  of  his  desire  to  withdraw,  and  if  there  is 
not  sufficient  money  applicable  to  the  payment  of  with- 
drawals to  pay  all  who  have  given  notice,  they  are 
paid  in  the  order  of  the  time  when  their  notices  of 
withdrawal  were  filed  with  the  secretary.  The  asso- 
ciation will  pay  them  as  rapidly  as  possible,  because 
the  one  withdrawing  is  surrendering  some  portion  of 
his  profits,  which  accrues  to  the  benefit  of  the  share- 
holders remaining ;  hence,  the  payment  of  withdraw- 
als is  always  a  profitable  use  of  the  funds  received  into 
the  treasury.  The  nature  of  the  scheme  does  not  ad- 
mit of  that  combination  of  facts  which  must  occur  to 
produce  the  feeling  of  uncertainty,  doubt,  and  sus- 
picion, which  breed  the  panic  and  sudden  rush  of  de- 
positors in  a  bank  to  obtain  their  money. 

The  management  of  the  association  is  in  the  im- 
mediate control  of  the  board  of  directors,  consisting 
usually  of  nine  members,  with  the  president,  secretary 


TYPICAL  ASSOCIATIONS.  39 

and  treasurer  and  vice  -  president  as  additional  ex 
officio  members  thereof,  making  seven  members  a 
quorum  for  the  transaction  of  business.  These  officers 
are  elected  annually.  In  their  election  each  shareholder 
has  one  vote  for  every  share  of  stock  owned  by  him 
not  in  arrears  for  dues.  The  president  appoints  from 
the  nine  directors  a  finance  committee  of  three  mem- 
bers, which  serves  for  four  months,  thus  using  upon 
this  committe  during  the  year  all  the  nine  members  of 
the  board.  .The  president  is  also,  ex  officio,  a  member 
of  every  finance  committee,  and  the  secretary  of  the 
association  acts  as  its  secretary. 

This  committee  receives  and  receipts  for  the  mon- 
eys at  the  monthly  meetings,  and  passes  them  over  to 
the  treasurer.  They  pass  upon  the  sufficiency  as  to 
the  value  of  all  real-estate  security  offered,  and,  in 
conjunction  with  the  attorney  of  the  association,  upon 
the  titles  of  the  real  estate  proposed  to  be  mortgaged 
to  the  association;  their  report  is  made  in  writing, 
and  signed  by  them.  As  a  rule,  no  compensation  is 
paid  to  any  officer  except  the  treasurer  and  secretary, 
and  their  salaries  are  not  large  ;  their  amount  will  be 
governed  by  the  volume  of  business  the  association  is 
doing. 

One  of  the  strong  elements  of  success  in  associa- 
tions organized  and  conducted  on  this  scheme  is  the  in- 
terest which  is  aroused  in  all  its  members  to  aid  in  its 
success ;  and  first-class  men  will  always  be  found  to  fill 
its  offices,  men  who  will  take  pride  in  faithfully  per- 
forming the  trust  reposed  in  them. 

We  have  now  spoken  of  the  general  features  of  the 
scheme  upon  which  the  co-operative  savings  and  loan 
associations  are  organized  and  conducted,  necessarily 


40   CO-OPERATIVE   SAVINGS   AND   LOAN   ASSOCIATIONS. 

in  this  general  outline  omitting  many  details  which 
will  fully  appear  in  subsequent  chapters. 

We  submit  to  the  reader  with  confidence  in  our 
assumption  that  no  scheme  has  been  devised  for  finan- 
cial co-operation  among  men  of  small  means  that  ex- 
cels the  one  we  have  thus  outlined  in  simplicity,  in 
safety,  in  accomplishing  an  equitable  division  of  bene- 
fits, and  in  the  certainty  of  success. 

We  have  not  outlined  an  organization  to  be  formed 
upon  some  finely  wrought  theory,  but  one  that  has  been 
most  thoroughly  tried  and  very  uniformly  met  the 
expectation  of  those  united  in  the  enterprise.  It  is 
not  an  organization  for  a  few  to  make  large  profits  at 
the  expense  of  the  many ;  or  one  wherein  the  borrower 
pays  a  large  interest  for  the  benefit  of  the  shareholder 
who  does  not  borrow.  All  stand  upon  equal  footing. 
It  does  not  encourage  speculation,  but  steady  savings ; 
and  to  attain  them,  there  must  be  industry  and  frugal 
habits.  It  encourages  home-building  and  all  the  bless- 
ings that  naturally  flow  from  it. 


CHAPTER  IV. 

THE    GKOWTH   AND    SPREAD   OF   CO-OPEEATIVE   SAV- 
INGS  AND   BUILDING-LOAN   ASSOCIATIONS. 

AT  the  present  time  the  data  requisite  for  writing  a 
full  history  of  the  growth  and  spread  of  the  co-oper- 
ative savings  and  building-loan  associations  in  the 
United  States  can  not  be  obtained.  We  can  only 
give  a  brief  outline.  Their  operations  and  develop- 
ment have  been  so  quiet  and  unobtrusive  they  have 
not  attracted  general  attention  until  within  the  last 
three  years.  Among  the  great  mass  of  American 
citizens  their  existence  even  has  been  unknown.  As 
a  rule,  they  have  not  been  under  State  supervision, 
and  no  public  record  has  been  kept  of  their  number, 
or  of  the  business  transacted  by  them.  Even  in  the 
localities  where  they  have  been  most  numerous  and 
best  managed,  the  beneficial  results  flowing  from 
them  have  not,  until  recently,  been  to  any  great  ex- 
tent spread  before  the  public.  As  a  factor  in  co-op- 
eration they  have  not  received  the  attention  they 
deserve. 

In  1887,  the  American  Economic  Association 
gave  them  due  prominence  in  their  monographs 
upon  co-operation.  During  that  year  they  began  to 
attract  the  attention,  quite  generally,  of  the  daily 


4:2  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

press,  and  at  the  present  time  no  form  of  direct  co- 
operation is  attracting  the  attention  of  the  public  so 
generally  as  these  associations.  The  scheme  under 
which  they  were  first  conducted  has  undergone  many 
changes  and  modifications.  Of  this  feature  in  their 
history,  we  shall  speak  in  the  next  chapter.  With 
these  changes,  have  arisen  changes  in  their  names. 
The  first  name  given  to  them  was  "  Building  Associ- 
ations." This  was  succeeded  by  "  Building  and  Loan 
Associations."  This  has  been  the  most  universal 
name  by  which  they  have  been  designated ;  but  a  great 
variety  of  other  names  have  come  into  use,  such  as 
"Mutual  Loan  Associations,"  "Savings-Fund  and 
Loan  Associations,"  "  Homestead  Aid  Associations," 
"  Co-operative  Savings  and  Loan  Associations,"  "  Co- 
operative Banks,"  etc.  The  best  generic  term  now  in 
use  seems  to  us,  is  the  name  adopted  by  the  New  York 
State  League,  viz.,  "  Co-operative  Savings  and  Build- 
ing-Loan Associations."  This  name  gives  the  four 
conspicuous  objects  in  their  business,  namely,  co-oper- 
ation, for  the  purpose  of  stimulating  savings,  for  build- 
ing homes  and  making  loans  therefor. 

From  data  *  that  seem  reliable,  we  learn  that  the 
first  building  association  in  this  country  was  or- 
ganized in  a  suburb  of  the  city  of  Philadelphia,  called 
Frankford,  January  3,  1831,  and  named  the  "  Oxford 
Provident  Building  Association."  The  scheme  was 
simple.  There  was  a  single  series  of  stock,  entrance 
fee  of  five  dollars,  monthly  dues  on  each  share  of  stock 
three  dollars,  and  matured  value  of  shares  $500.  The 
shares  reached  their  maturity  in  ten  years  and  six 

*  A  book  entitled  "  ITow  to  Manage  Building  Associations,"  by 
Edmund  Wrigley,  of  Philadelphia,  published  in  1S73. 


GROWTH  AND  SPREAD.  43 

months,  and  the  association  was  dissolved.  A  new 
association  of  the  same  name  was  formed  at  once. 

Another  similar  association  was  formed  in  the  same 
place  in  1845,  called  the  "  Franklin  Building  Associa- 
tion," in  which  the  matured  value  of  the  shares  was 
placed  at  $200  and  monthly  dues  at  one  dollar.  In 
1847,  an  association  similar  to  the  Franklin  was  organ- 
ized in  the  Kensington  District  of  Philadelphia.  The 
number  of  shares  was  limited  to  five  hundred;  the 
matured  value  of  shares  $200,  and  monthly  dues  of 
one  dollar. 

During  the  last  years  of  that  decade,  the  organi- 
zation of  these  associations  in  Philadelphia  was  very 
rapid.  Until  1849  or  1850  none  were  incorporated. 
They  were  simply  voluntary  associations,  holding  their 
property  through  the  medium  of  trustees.  Yet  so 
rapid  had  been  their  growth  in  that  city  that  fifty  or 
more  were  organized  between  1831  and  1849.  The 
laws  of  the  State  of  Pennylvania  passed  in  1850,  pro- 
viding for  their  incorporation,  limited  the  number  of 
shares  which  an  association  could  issue  to  five  hundred. 
In  1859  the  law  was  amended  by  increasing  the  limit  to 
2,500  shares,  of  $200  each  matured  value.  In  1874  the 
law  was  further  amended  by  removing  the  limit  as  to 
the  number  of  shares,  but  limiting  the  aggregate  value 
of  the  stock  an  association  might  have  outstanding  to 
$1,000,000. 

We  have  no  data  at  hand  of  the  number  of  associ- 
ations chartered  from  1850  to  1859  inclusive ;  but  dur- 
ing the  decade  of  1860  to  1869  inclusive  one  hundred 
and  forty-eight  associations  were  chartered  ;  and  from 
1870  to  1875  inclusive  three  hundred  and  seventeen 
were  chartered.  In  1876,  the  centennial  year,  there 


44  CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONS. 

were  in  active  operation  in  Philadelphia  alone  at  least 
four  hundred  and  fifty  associations.  We  believe  it  a 
safe  estimate  to  make,  that  such  number  exceeded  the 
total  number  of  associations  in  all  places  in  the  United 
States.  M.  J.  Brown,  editor  and  proprietor  of  the 
"  Building  Association  and  Home  Journal,"  now  places 
the  total  number  of  associations  in  the  State  of  Pensyl- 
vania  at  nine  hundred,  of  which  four  hundred  and 
fifty  are  located  in  the  city  of  Philadelphia,  and  four 
hundred  and  fifty  in  other  parts  of  the  State.  Hence 
it  can  be  said  with  great  fitness  that  Philadelphia  has 
been  the  "breeding-place"  of  these  associations  in 
America.* 

Prof.  F.  B.  Sanborn,  Secretary  of  the  American 
Social  Science  Association,  in  1888  asked  Mr.  Brown 
the  question  as  to  the  amount  of  capital  invested  in 
these  associations  in  Philadelphia  and  in  all  Pennsyl- 
vania, and  we  quote  the  following  from  Prof.  San- 
born's  report :  "  M.  J.  Brown  has  undertaken  to  answer 
this  question,  and  his  figures,  although  partly  esti- 
mates, are  of  great  value.  He  examined  the  sworn 
accounts  of  one  hundred  and  twenty  building  associa- 
tions with  the  following  results :  Aggregate  capital, 
$8,749,337 ;  average  capital,  $72,911 ;  aggregate  shares, 
151,680 ;  average  shares,  1,264.  Applying  this  ratio  to 
the  three  hundred  and  thirty  Philadelphia  associations, 
their  aggregate  capital  becomes  $32,810,017,  and  the 
total  number  of  their  shares  568,800." 

The  total  estimate  for  the  State  reaches  $60,000,000 
of  capital,  and  nearly  1,000,000  shares. 

*  Prof.  F.  B.  Sanborn's  report  on  "  Co-operative  Building,"  read 
at  the  September  meeting  of  the  American  Social  Science  Associa- 
tion at  Saratoga  in  1888. 


GROWTH  AND   SPREAD.  45 

Dr.  R.  T.  Ely,  in  his  "  Labor  Movement  in  Ameri- 
ca," published  in  1886,  says :  "  Six  years  ago  it  was 
officially  stated  that  60,000  comfortable  homes  had 
been  constructed  in  Philadelphia  alone  through  the 
aid  derived  from  the  building  associations,  and  it  is 
certain  Mr.  Barnard  did  not  exaggerate  when  he  en- 
titled the  chapter  describing  them,  in  his  work  on 
'  Co-operation  as  a  Business,'  '  One  Hundred  Thous- 
and Homes.' " 

The  influence  of  these  associations  has  been  most 
potent  in  encouraging  home-owning  and  home-build- 
ing among  the  wage- workers  of  Pennsylvania ;  and  it 
is  asserted  that  there  is  no  city  in  the  Union  of  its 
size,  or  approximating  to  it,  where  so  many  of  the 
wage-earners  own  their  homes  as  in  Philadelphia.  We 
believe  it  a  fact  to  be  noted,  that  in  no  city  of  its  age 
or  approximate  population  does  the  anarchist  or  ex- 
treme socialist  find  so  few  followers  as  in  this  city. 

From  Pennsylvania  these  associations  have  spread 
into  almost  every  State  in  the  Union. 

New  Jersey. 

The  Bureau  of  Statistics  of  Labor  and  Industries 
of  New  Jersey  is  to  be  commended  for  the  interest 
and  enterprise  it  has  manifested  in  collecting  statistics 
relating  to  this  form  of  co-operation  in  that  State. 
No  bureau  of  labor  or  statistics  in  any  other  State, 
except  Massachusetts,  has,  until  the  present  time, 
deemed  them  of  sufficient  importance  to  demand  at- 
tention. In  1880,  1882,  1884,  and  1886,  the  New 
Jersey  Bureau  collected  data  regarding  these  associa- 
tions. We  quote  as  follows  from  their  report  for 
1886: 


46  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

In  1880,  when  the  bureau  first  endeavored  to  collect  in- 
formation from  the  building  and  loan  associations  in  this 
State,  there  were  reported  to  be  in  existence  one  hundred 
and  six  of  these  societies,  but  less  than  one  half  (fifty-one) 
favored  us  with  returns.  These  aggregated,  in  net  assets, 
$4,002,647",  and  about  forty-seven  thousand  shares,  or  an 
average  of  $78,483  assets  and  nine  hundred  and  twenty-one 
shares  to  the  association.  Previous  to  the  year  mentioned, 
no  such  statistics  had  been  available,  and,  except  in  the  im- 
mediate localities  where  they  flourished,  no  one  had  any  idea 
of  the  extent  or  condition  of  the  New  Jersey  co-operative 
building  enterprises — something  which  had  much  to  do  with 
intercepting  their  development. 

Our  publication,  incomplete  as  it  was,  met  with  much 
favor  and  attracted  considerable  attention  throughout  the 
State  to  this  form  of  co-operation.  And  when,  two  years 
later,  in  1882,  we  again  investigated  the  subject,  one  hun- 
dred and  eighteen  secretaries,  without  exception,  cheerfully 
sent  in  replies.  According  to  our  estimate,  there  were  dur- 
ing that  year  one  hundred  and  twenty-eight  New  Jersey 
building  and  loan  associations,  of  which  twelve  "terminat- 
ing" ones  were  reported  to  be  closing  up,  that  is,  their 
shares  had  matured.  The  aggregate  returns  from  the  one 
hundred  and  eighteen  organizations,  of  which  the  majority 
were  serial  or  perpetual,  gave  102,075  shares,  owned  by 
20,000  members,  of  whom  fully  6,000  were  borrowers.  The 
assets  amounted  to  $6,748,775.  The  averages  were,  there- 
fore, eight  hundred  and  sixty-four  shares,  one  hundred  and 
seventy  shareholders,  and  $57,192  assets — an  apparent  de- 
crease, easily  accounted  for  by  the  fact  that  very  many  small 
societies,  not  reporting  in  1880,  made  returns. 

In  1884  there  were  said  to  be  in  existence  one  hundred 
and  twenty-nine  building  and  loan  associations,  a  number  of 
which  had  been  organized  since  the  statements  for  1882  ap- 
peared, while  several  of  the  terminating  societies  running  at 
that  time  had  been  "  wound  up."  ...  It  was  estimated 
that  the  net  assets  of  all  the  New  Jersey  associations  in  1884 


GROWTH  AND  SPREAD.  47 

amounted  to  $7,000,000,  and  that  of  our  wage-workers  who 
had  secured  homes,  at  least  4,000  were  then  engaged  in  pay- 
ing off  mortgages  with  assistance  obtained  as  shareholders. 

The  fourth  census  of  our  building  and  loan  enterprises 
was  made  by  the  bureau  at  the  close  of  the  present  year. 
On  October  1st  a  circular  was  sent  to  the  various  associa- 
tions, the  names  of  the  newly- organized  ones  having  been 
obtained  from  the  county  clerks,  asking  for  the  information 
tabulated  in  the  tables  below,  which  give  the  statistical 
details  of  one  hundred  and  fifty- six  organizations  in  active 
operation  at  that  date.  .  .  .  The  number  stated,  one  hun- 
dred and  fifty-six,  therefore  includes  all  the  active  associa- 
tions at  the  beginning  of  the  fall.  Since  then  and  up  to  the 
close  of  the  year,  several  more  have  been  incorporated,  so 
that  the  total  at  present  can  not  be  far  from  one  hundred 
and  seventy — a  very  rapid  increase  within  the  past  two  years. 
From  the  reports  which  have  been  forwarded  to  the  bureau, 
these  New  Jersey  associations  are  generally  in  a  very  pros- 
perous condition,  and  a  great  benefit,  not  only  to  the  indi- 
vidual members,  but  to  the  community  at  large  ;  for  they 
are  increasing  the  number  of  tax-paying,  property-owning 
citizens,  and  making  it  comparatively  easy  for  an  industrious 
workingman  to  own  a  home.  The  improvement  has  been 
noticeable  in  the  northern  part  of  the  State,  especially  in 
Essex  and  Hudson  Counties,  where  the  number  of  the  asso- 
ciations has  doubled  since  1884,  and  both  Jersey  City  and 
Newark  now  each  support  a  building  and  loan  journal — the 
"  News  "  and  u  Advocate  " — the  only  newspapers  of  the  kind 
published  in  the  State.  ...  A  summary  of  the  statistics  of 
the  one  hundred  and  fifty-six  New  Jersey  associations  shows 
the  following  results :  37,730  shareholders  holding  204,653 
shares,  or  an  average  of  two  hundred  and  forty-two  members 
and  over  thirteen  hundred  shares — five  and  a  half  to  each 
shareholder.  The  net  assets  foot  up  $9,349,517.46,  or  nearly 
$60,000  to  an  association.  Of  the  members,  nearly  two 
thirds  are  wage-earners,  and  8,562,  or  over  one  fifth,  are 
borrowers.  Of  the  latter,  5,354,  or  over  sixty  per  cent,  are 


48  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

workingmen.  Over  one  fifth  of  the  shares,  or  42, 373,  have 
been  borrowed  on.  The  profits  of  one  hundred  and  forty- 
two  associations  (net  assets,  $8,915,120)  were  $1,706,649,  or 
an  average  of  $12,018  for  $50,764  paid  in  dues;  that  is,  23.7 
per  cent  for  the  average  time  (two  years  and  a  half)  the 
shares  have  run — about  nine  and  a  half  per  cent  a  year.  The 
incidental  expenses  have  averaged,  for  one  hundred  and  ten 
associations,  $353  annually. 

From  the  tabulated  statements  of  facts  in  said  re- 
port, relating  to  the  one  hundred  and  fifty-six  associa- 
tions that  reported  in  detail  to  the  bureau  in  1886, 
we  learn  that  about  fifty-six  were  organized  on  the 
single  series,  or  terminating  plan,  and  about  one  hun- 
dred on  the  serial,  or  permanent  plan ;  that  the  county 
of  Camden  had  twenty-four  associations,  all  upon  the 
permanent  plan ;  the  county  of  Essex  twenty-four,  of 
which  eight  were  on  the  terminating  plan ;  the  county 
of  Hudson  twenty-one,  of  which  all  were  on  the  ter- 
minating plan  except  six;  the  county  of  Middlesex 
fifteen,  all  of  which  were  of  the  terminating  kind  ex- 
cept two ;  the  county  of  Burlington  had  thirteen,  of 
which  all  were  of  the  permanent  plan  except  two. 

One  of  the  largest  associations  in  the  State,  at  the 
date  of  the  report,  was  the  "  People's  Building  and 
Loan  Association,"  at  Harrison.  This  association  was 
organized  in  1873  on  the  serial  plan.  At  the  date  of 
its  annual  report,  in  1886,  it  had  outstanding  5,017^ 
shares,  held  by  1,046  shareholders,  distributed  into 
eleven  series,  and  of  the  aggregate  value  of  $192,947.31. 
The  matured  value  of  shares  is  $200,  and  monthly 
dues  are  one  dollar.  The  whole  number  of  shareholders 
were  reported  to  be  wage-earners.  The  constitution 
of  this  association  is  printed  in  the  bureau's  report,  in 


GROWTH  AND  SPREAD.  49 

full,  with  the  remark,  that  "  the  constitution  of  this 
association  is  reproduced  below,  and,  as  it  is  generally 
considered  to  be  a  very  good  one,  may  serve  as  a  model 
for  new  enterprises."  * 

The  first  association  in  New  Jersey  was  organized 
prior  to  1847,  but  that  was  the  year  in  which  the 
Legislature  first  passed  an  act  authorizing  their  incor- 
poration ;  another  act  was  passed  in  1849,  which  was 
revised  in  1875.  The  law  for  incorporation  is  very 
general  in  its  terms,  and  permits  an  endless  variety  in 
the  schemes  upon  which  the  business  may  be  con- 
ducted. Their  growth  and  prosperity  in  this  State 
continues,  and  at  the  present  time  there  are  not  less 
than  one  hundred  and  eighty  associations. 

Massachusetts. 

"We  are  able  to  obtain  full  statistics  with  reference 
to  loan  associations  in  the  State  of  Massachusetts  from 
the  reports  of  the  Commissioners  of  Savings-Banks  of 
that  State. 

The  Hon.  Josiah  Quincy,  now  deceased,  became 
deeply  interested  in  these  associations  as  a  means  of 
stimulating  the  wage-workers  in  the  matter  of  savings, 
home-building,  and  home-owning.  As  the  result  of 
his  endeavors,  a  general  act  providing  for  their  incor- 
poration was  passed  in  1877.  By  that  act,  they  were 
named  "Co-operative  Saving-Fund  and  Loan  Asso- 
ciations." In  1883  the  act  was  amended,  so  that  they 
were  named  "  Co-operative  Banks,"  and  this  is  the 
name  by  which  they  are  now  designated  in  this  State. 

This  general  act  for  their  incorporation  was  care- 
fully prepared  by  experts  in  Philadelphia,  as  we  are 
*  See  Appendix. 


50  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

informed,  and  outlines  a  definite  scheme  for  the  or- 
ganization and  conduct  of  their  business.  Under  this 
scheme,  the  associations  are  permanent — issuing  quar- 
terly, semi-yearly,  or  yearly  series,  as  the  association 
shall  determine.  The  matured  value  of  shares  is  $200, 
monthly  dues  are  one  dollar,  and  the  accumulated 
capital  is  not  to  exceed  $1,000,000. 

From  the  report  of  the  Savings-Bank  Commission- 
ers of  Massachusetts,  dated  December  31,  1887,  we 
learn  that  on  October  31,  1887,  the  total  number  of 
co-operative  banks  was  fifty-one — a  gain  of  eleven  dur- 
ing the  last  year ;  that  their  total  assets  were  $4,211,- 
948.86— a  gain  in  one  year  of  $982,982.24.  The  total 
number  of  shares  outstanding,  134,864 ;  the  total  num- 
ber of  shareholders,  20,735,  of  whom  3,797  were  bor- 
rowers. 

From  the  date  of  that  report  up  to  September  1, 
1888,  it  is  authoritatively  reported  that  thirteen  new 
co-operative  banks  were  organized,  making  a  total  of 
sixty-four. 

The  first  of  these  banks,  organized  under  the  act 
of  1877,  was  the  Pioneer  Co-operative  Bank  of  Boston. 
The  largest  of  these  banks  is  at  Waltham ;  its  assets, 
October  31,  1887,  were  $337,647.29;  number  of  shares 
outstanding,  8,893 ;  number  of  shareholders,  1,488,  of 
whom  288  were  borrowers. 

Of  the  sixty-four  banks,  about  eleven  are  in  Bos- 
ton, and  the  rest  are  well  distributed  throughout  the 
cities  and  large  towns  of  Massachusetts — there  being 
three  in  Worcester,  three  in  Taunton,  two  in  Fall 
Kiver,  and  one  each  in  Lowell,  Lynn,  New  Bedford, 
Cambridge,  Chelsea,  Somerville,  Springfield,  Holyoke, 
Westfield,  Fitchburg,  Waltham,  Woburn,  etc.  But 


GROWTH  AND  SPREAD.  51 

three  of  the  twenty-five  cities  of  the  State  are  without 
one,  while  many  of  the  larger  towns  where  skilled 
workmen  are  employed  have  each  one  of  these  banks. 
The  number  of  these  savings  institutions  is  now  in- 
creasing more  rapidly  than  ever.  They  are  all  con- 
ducted upon  the  same  scheme,  except  that  the  law 
admits  of  the  bank  deciding  for  itself  whether  it  will 
adopt  the  installment  premium  plan  or  the  interest 
premium  plan.  They  are  under  State  supervision. 
Massachusetts  now  justly  ranks  at  the  head  in  its  legis- 
lation relative  to  these  associations.  Under  its  laws, 
the  danger  of  wild  speculative  schemes  coming  in  vogue 
is  wholly  averted. 

Maine. 

Loan  associations  have  not  developed  yet  to  any 
considerable  extent  in  Maine,  there  being  but  ten  or 
twelve  in  the  State  at  the  present  time.  These  have 
been  principally  organized  during  the  last  five  years. 

New  Hampshire. 

In  New  Hampshire  there  are  but  four  associations, 
all  organized  since  1887. 

Rhode  Island. 

There  are  said  to  be  but  three  associations  in  this 
State,  the  leading  one  being  at  Providence. 

Vermont. 

There  is  at  present  no  law  for  the  incorporation 
and  organization  of  loan  associations  in  Vermont,  and, 
so  far  as  we  have  been  able  to  ascertain,  none  have 
been  organized. 

^sr 

OF  THB 

[UJXTBRSITtf 


52  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

Connecticut. 

Prof.  Sanborn,  in  the  report  before  cited,  says: 
"  In  Connecticut  there  are  six  or  seven  associations  in 
different  parts  of  the  State ;  one  at  New  Haven  having 
a  special  charter,  and  the  rest  are  voluntary  associa- 
tions, having  no  incorporation."  There  is  one  located 
at  Meriden,  called  "  The  Meriden  Permanent  Building 
and  Loan  Association." 

Much  interest  in  these  associations  is  now  develop- 
ing in  this  State,  and  without  doubt  a  law  authorizing 
their  incorporation  will  soon  be  passed.  Connecticut 
passed  through  an  unfortunate  experience  with  build- 
ing associations  in  former  years ;  but  the  schemes  upon 
which  they  were  organized  and  conducted  were  widely 
apart  from  the  scheme  of  the  true  building  and  loan 
association.  C.  F.  Southard  is  our  authority  for  saying 
that  the  methods  of  these  old  associations  resulted  in  so 
much  of  popular  feeling  against  them  that  the  Legis- 
lature instituted  a  searching  investigation  concerning 
them,  and,  as  a  result,  in  1860  savings  and  building 
associations  were  forbidden  to  receive  deposits  after 
January  1,  1862,  and  in  1865  they  were  required  to 
return  all  deposits  on  or  before  July  1,  1866,  which 
practically  wound  them  up.  The  law  under  which 
they  were  organized  was  repealed. 

The  associations  now  forming  in  this  State  are  or- 
ganized upon  safer  methods.  So  much  of  interest  is 
aroused  in  them  that  a  newspaper  called  "  The  Build- 
ing News  and  Household  Journal  "  is  now  published 
at  Meriden,  devoted  to  the  Meriden  building  and  loan 
associations  and  co-operative  and  fraternal  societies. 


GROWTH  AND  SPREAD.  53 

New  York. 

Of  the  early  history  of  loan  and  building  associa- 
tions in  New  York  very  little  reliable  data  are  to  be 
obtained.  An  act  was  passed  for  their  incorporation  in 
1851.  There  were  some  associations  in  the  State  at 
that  time.  Between  1849  and  1859  a  large  number  of 
associations  were  formed,  but  the  act  of  1851  outlined 
no  definite  scheme.  It  was  so  general  in  its  provisions 
that  it  permitted  the  incorporation  of  any  scheme, 
whether  good  or  bad.  The  bad  schemes,  and  especially 
those  of  a  speculative  character,  came  into  great  promi- 
nence. Promises  were  made  by  the  organizers  of  the 
associations  which  could  not  be  fulfilled.  Heavy  losses 
were  sustained  in  many  places  by  the  confiding  share- 
holders, and  generally  the  expectations  of  those  invest- 
ing in  them  were  not  realized.  They  consequently  fell 
into  popular  disfavor.  C.  F.  Southard  is  authority  for 
saying  that  such  disfavor  culminated  in  the  Legislature 
appointing  a  committee  of  three  to  investigate  them, 
and  that  such  committee  reported  in  favor  of  revoking 
the  charters  of  all ;  but  the  report  was  not  adopted. 
The  number  in  the  State  at  the  time  of  the  investiga- 
tion was  one  hundred  and  twenty-four.* 

It  is  certain  that  in  1870  there  were  very  few  asso- 
ciations in  the  State  of  New  York.  The  city  of  Koch- 
ester  and  vicinity  is  now  the  banner  locality  in  the 
number  and  success  of  these  associations,  in  proportion 
to  the  population.  They  number  at  the  present  time 
eighty-three,  and  are  forming  so  rapidly  that  before  this 
statement  is  printed  their  number  may  reach  a  hundred. 

The  first  association  in  this  city  was  organized  in 

*  C.  F.  Southard  in  an  article  in  the  "  New  York  Star,"  September 
9,  1888.     See  also  "Assembly  Documents,"  1856,  vol.  iii,  No.  46. 


54:  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

1852,  but  did  not  continue  long;  not  meeting  the  ex- 
pectation of  its  stockholders,  its  affairs  were  closed  up. 
The  next  association  was  not  organized  until  1871. 
There  was  quite  a  "  boom  "  for  a  few  years  in  their 
growth.  During  1871  and  1872  some  "  building  lots  " 
associations  were  formed  in  that  city ;  that  is,  associa- 
tions which  bought  a  tract  of  land,  and  then  sold  lots 
to  be  paid  for  in  monthly  or  weekly  sums,  much  after 
the  manner  of  the  true  building  and  loan  associations. 
Many  of  the  shareholders  built  houses.  The  associa- 
tions ran  in  debt  for  the  land,  giving  a  mortgage  upon 
it.  Several  proved  financial  failures,  and  in  due  time 
the  mortgage  was  foreclosed,  and  the  savings  of  those 
who  had  invested  were  lost.  These  were  confounded 
in  the  public  mind  with  the  true  building  and  loan 
associations,  and  injured  them  much.  It  was  not  until 
1882  that  they  began  to  increase  again.  "  The  Home- 
stead Loan  Association  of  Rochester,"  organized  upon 
the  terminating  plan,  was  then  reorganized  upon  a 
permanent  plan,  and  has  taken  the  lead  of  all  associa- 
tions in  the  State.  According  to  its  annual  report, 
October  7,  1887,  it  had  1,506  shareholders,  of  whom 
261  were  borrowers ;  it  had  outstanding  17,512  un- 
matured  shares  and  502  matured  shares,  and  its  assets 
amounted  to  $270,266.51. 

The  first  association  in  Buffalo  was  organized  Aug. 
6,  1851,  the  second  in  1860.  They  have  been  very 
successful  in  that  city.  While  there  are  no  accurate 
statistics  as  to  the  number,  and  estimates  differ  widely, 
the  lowest  estimate  is  one  hundred.*  One  of  the  old- 

*  From  a  search  recently  made  in  the  clerk's  office  of  Erie 
County,  we  learn  that  the  total  number  which  have  been  incor- 
porated in  that  county  amounts  to  327.  Until  recent  years  they 


GROWTH   AND  SPREAD.  55 

est,  if  not  the  oldest,  association  in  the  State  now  doing 
business  was  organized  in  Elmira  in  1875,  and  called 
"  The  Chemung  Valley  Mutual  Loan  Association."  It 
was  organized  upon  the  scheme  of  issuing  a  yearly  series 
of  stock ;  matured  value  of  shares,  $200  ;  monthly  dues 
of  one  dollar,  and  monthly  interest  at  six  per  cent.  It 
is  now  in  its  fourteenth  financial  year,  and  eminently 
successful.  From  it  as  a  model  others  have  been  or- 
ganized in  the  Southern  Tier  counties.  The  president 
of  this  association  drafted  the  New  York  Act  of  1887 
for  the  incorporation  of  co-operative  savings  and  loan 
associations  before  mentioned ;  and  many  of  the  recently 
organized  associations  have  organized  under  its  provis- 
ions. The  passage  of  this  act  through  the  Legislature 
drew  attention  to  the  associations  throughout  the  State. 
About  the  same  time  persons  in  New  York  became  in- 
terested in  them,  and  began  to  write  them  up  in  the 
daily  press.  About  two  years  ago  the  publication  of  a 
monthly  paper  was  commenced  in  the  city  of  New 
York,  known  as  the  "  Building  and  Loan  News."  It 
has  served  as  a  channel  for  the  exchange  of  views  be- 
tween those  interested  in  the  subject,  and  its  publisher 
and  his  friends  have  done  much  during  the  last  two 
years  to  arouse  public  interest  therein.  About  the 
same  time  several  of  the  New  York  dailies  began  writ- 
ing the  plan  up,  and  associations  were  formed  by  em- 
ployes of  several  of  the  papers.  The  "  Star  "  became 
a  notable  champion  through  the  graceful  pen  of  C.  F. 
Southard,  who  has  done  much  for  co-operative  associa- 
tion in  New  York  and  its  vicinity. 

were  organized  upon  the  single-series  plan,  and  nearly  all  associa- 
tions organized  more  than  ten  years  ago  have  matured  their  stock 
and  ceased  to  exist. 


56  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

As  a  result  of  all  this  movement  there  has  come  to 
pass  a  regular  "  boom  "  in  building  and  loan  associa- 
tions in  the  cities  of  New  York,  Brooklyn,  and  neigh- 
borhood, and  it  is  now  extending  throughout  the  whole 
State.  At  the  present  time  there  are  thirty  associa- 
tions in  New  York,  eighteen  in  Brooklyn,  four  in 
Westchester,  and  in  the  whole  State  of  New  York 
about  two  hundred  and  seventy-five.  They  are  now 
organizing  with  great  rapidity,  and  I  have  no  doubt 
that  on  January  1,  1890,  there  will  be  four  hundred 
associations  in  the  State  of  New  York. 

A  State  League  was  organized  in  June,  1888,  which 
promises  to  have  great  influence  in  legislation  affecting 
these  associations.  Mr.  George  W.  Elliott,  of  Eoches- 
ter,  is  president  of  the  League,  and  Charles  0.  C.  Hen- 
nessy,  of  New  York,  is  its  secretary. 

Ohio. 

Ohio  ranks  next  to  Pennsylvania  in  the  number  of 
its  associations.  No  accurate  statistics,  however,  have 
been  gathered  with  reference  to  them,  and  only  a 
proximate  estimate  can  be  made  as  to  their  number. 
Prof.  F.  B.  Sanborn,  in  his  report  before  mentioned,* 
says  it  is  supposed  that  their  number  in  Ohio  exceeds 
six  hundred.  Of  this  number,  about  four  hundred  are 
in  Hamilton  County.  The  first  association  in  the  State 
was  organized  in  1857  in  the  city  of  Cincinnati.  Dr. 
P.  A.  Peck  was  the  promoter  of  its  organization,  and 
became  the  champion  of  these  organizations  in  their 
early  history  in  that  city. 

It  seems  they  have  outrun  his  expectations,  and 

*  Report  to  American  Social  Science  Association  in  September, 
1888. 


GROWTH  AND   SPREAD.  57 

have  increased  in  numbers  beyond  the  requirements  of 
the  community.  In  writing  of  his  work  for  these  as- 
sociations three  years  ago,  he  said :  "  There  are  too 
many  building  associations.  At  the  time  I  started  the 
system  I  thought  that  five  or  six  societies  would  be 
enough  for  the  needs  of  the  people  of  this  city ;  but 
now  there  are  so  many  I  think  a  great  many  people 
suffer  by  it.  ...  Some  of  the  members,  instead  of 
paying  their  debts,  put  their  weekly  earnings  into  these 
associations.  ...  It  is  my  opinion  that  societies  nowa- 
days pay  too  much  in  the  way  of  salaries  and  current 
expenses." 

It  is  estimated  that  the  shareholders  in  Cincinnati 
exceed  seventy-five  thousand.  In  this  city  these  asso- 
ciations far  outstrip  the  savings-banks  in  the  amount 
of  their  investments  and  the  number  of  their  deposit- 
ors. There  is  located  at  Dayton  one  of  the  largest,  if 
not  the  largest,  association  in  the  United  States.  It  is 
called  the  "  Mutual  Home  and  Savings  Association." 
The  scheme  upon  which  its  business  is  conducted  is 
widely  divergent  from  the  true  scheme  of  the  building 
and  loan  association.  It  issues  shares  of  $100  and  $500 
matured  value.  It  also  permits  shares  to  be  paid  up 
in  full  at  one  payment,  and  then  pays  cash  dividends 
upon  such  shares.  It  has  an  office  open  during  busi- 
ness hours  for  the  receipt  of  dues,  interest,  etc.  It 
amounts,  in  fact,  to  a  bank,  involving  in  the  conduct 
of  its  business  many  of  the  beneficial  principles  be- 
longing to  the  true  building  and  loan  association ;  but 
instead  of  being  purely  a  co-operative  savings  and  loan 
association,  it  becomes  an  institution  in  which  the 
capitalist  can  invest  a  considerable  sum  of  money  in 
one  lump  in  the  purchase  of  paid-up  stock,  and  hold 
5 


58  CO-OPERATIVE   SAVINGS  AND   LOAN  ASSOCIATIONS. 

the  same  as  an  investment.  The  true  co-operative 
savings  and  loan  association  allows  only  weekly  or 
monthly  payments  to  be  made  for  the  purpose  of  accu- 
mulating savings.  The  law  in  Ohio,  under  which  these 
associations  are  conducted,  was  amended  in  1886  after 
much  discussion.  They  have  not,  however,  as  yet, 
been  brought  under  State  supervision. 

Illinois. 

The  first  building  and  loan  association  organized 
in  Illinois,  and  in  fact  in  the  West,  was  in  1849,  in 
Chicago,  under  the  name  of  "  The  Chicago  Building 
Association."  It  conducted  business  without  a  char- 
ter until  1851,  when  it  was  chartered  by  special  act  of 
the  Legislature.  The  next  association  in  this  State 
was  organized  at  Jerseyville,  in  1852,  and  the  third  at 
Chicago  in  1857.  It  was  not  until  1869  that  a  general 
act  was  passed  authorizing  their  incorporation ;  but 
prior  to  that  many  had  been  incorporated  by  special 
act  of  the  Legislature.  The  statute  of  1869  authorized 
the  incorporation  of  associations  for  purposes  widely 
divergent  from  the  true  building  and  loan  association, 
as  the  following  quotation  shows.  It  authorized  a 
number  of  persons  to  "  form  themselves  into  an  incor- 
porated company  for  the  purpose  of  accumulating  a 
fund  for  the  purchase  of  real  estate  in  large  tracts, 
paying  off  incumbrances  thereon,  the  improvement 
thereof  into  lots  and  parcels  suitable  for  homesteads, 
and  the  distribution  of  such  lots  or  parcels  among  the 
shareholders." 

Then  follows  provisions  covering  the  legitimate 
building  and  loan  association.  In  1872  a  law  was 
passed,  patterned  after  the  laws  of  Pennsylvania  at 


GROWTH  AND   SPREAD.  59 

that  time,  which  superseded  the  law  of  1869.  In  1874 
this  law  was  repealed,  it  is  claimed,  through  the  influ- 
ence of  those  interested  in  savings-banks.  In  1879 
the  law,  substantially  of  1872,  was  re-enacted.  In  1880 
a  member  of  an  association  at  Monticello,  incorporated 
under  the  act  of  1872  while  in  force,  refused  to  pay 
his  loan,  alleging  that  the  following  section  of  the  act 
of  1872  was  in  conflict  with  the  Constitution  of  the 
State.  "  Corporations  organized  under  this  act  being 
of  the  nature  of  co-operative  associations,  therefore,  no 
premiums,  fines,  nor  interest  on  such  premiums  that 
may  accrue  to  the  said  corporations  according  to  the 
provisions  of  this  act  shall  be  deemed  usurious,  and 
the  same  may  be  collected  as  any  other  debt  of  like 
amount  may  be  collected  by  law  in  this  State." 

In  the  lower  court  the  claim  of  the  refractory  bor- 
rower was  sustained ;  and  this  decision  was  affirmed  in 
the  Supreme  Court  of  the  State.  At  that  time  there 
were  twenty  associations  in  the  State.  By  union  of 
action  on  the  part  of  some  fourteen  of  this  number,  a 
reargument  was  obtained  in  the  Supreme  Court,  and 
upon  such  rehearing  the  court  reversed  its  first  ruling, 
and  held  that  the  statute  was  constitutional.  This 
decision  marks  the  beginning  of  a  new  era  in  building 
and  loan  associations  in  Illinois.  It  called  into  exist- 
ence the  Illinois  Building  Association  League,  which 
has  done  much  to  advance  the  interests  of  associations. 
Through  its  influence  two  amendments  to  the  law  were 
passed  in  1888,  one  authorizing  the  installment  plan 
of  paying  premiums,  and  the  other  exempting  the 
stock  and  mortgages  of  the  associations  from  taxation. 
The  provisions  of  the  law  do  not  provide  for  State  su- 
pervision. That  subject  is  now  being  agitated. 


60   CO-OPERATIVE   SAVINGS  AND   LOAN  ASSOCIATIONS. 

Since  the  decision  before  mentioned,  building  asso- 
ciations have  increased  in  number  with  great  rapidity, 
until  there  is  claimed  to  be  over  two  hundred  and  fifty 
in  Chicago  and  nearly  three  hundred  in  other  parts  of 
the  State.  From  my  own  investigations,  I  am  led  to 
believe  that  the  number  is  as  large  in  Illinois  as  in 
Ohio.  A  local  league  of  the  associations  in  Chicago 
and  vicinity  has  recently  been  formed.  One  of  the 
best  newspapers  in  the  country  devoted  to  these  asso- 
ciations is  published  at  Chicago,  under  the  name  of 
"  The  American  Building  Associations  News."  * 

Wisconsin. 

The  Secretary  of  State  has  kindly  furnished  us  a 
list  of  all  the  associations  in  this  State  that  have  filed 
certificates  of  incorporation  in  his  office  up  to  the 
month  of  November,  1888.  The  total  number  at  that 
date  was  forty-two.  They  were  located  in  twenty  cities 
and  villages.  Milwaukee  had  twenty  of  this  number ; 
Chippewa  Falls,  Superior,  Lacrosse,  and  Oshkosh  two 
each,  while  each  of  the  remaining  localities  had  but 
one. 

It  is  somewhat  remarkable  that  over  one  half,  or 
twenty-three,  of  the  total  number  were  incorporated 
in  1887.  Five  were  incorporated  in  1886;  four  in 
1885  ;  three  in  1884 ;  and  two  in  1883.  Five  were  in- 
corporated in  1888  up  to  the  month  of  November. 

This  list  shows  the  oldest  association  was  incor- 
porated October  17,  1883,  located  at  Appleton,  and 
called  "  The  People's  Saving-Fund  and  Building  As- 

*  For  many  of  the  facts  in  the  foregoing  relating  to  Illinois  we 
are  indebted  to  a  report  prepared  by  Prof.  Jenks,  of  Galesburg,  for 
the  American  Social  Science  meeting  in  1888. 


GROWTH  AND   SPREAD.  61 

sociation."  We  are  led  to  believe  that  there  must 
have  been  some  associations  in  this  State  before  that 
date,  but  they  were  not  required  to  file  their  certificates 
of  incorporation  in  the  office  of  the  Secretary  of  State. 

We  are  led  to  this  conclusion  from  the  course  of 
legislation.  The  Eevised  Statutes  of  the  State,  adopted 
in  1878,  authorized  the  incorporation  of  these  asso- 
ciations. The  statute  provided  that  the  capital  stock 
should  not  exceed  $500,000,  and  should  be  divided 
into  shares  of  $200  each.  In  1882  the  law  was  amended, 
providing  that  the  capital  might  be  divided  into  shares 
of  not  less  than  twenty- five  dollars,  nor  more  than  two 
hundred  dollars.  Other  amendments  were  made  at 
this  time.  This  legislation  occurred  before  the  organi- 
zation of  the  associations  at  Appleton,  and  was  un- 
doubtedly had  to  meet  the  wishes  of  some  association 
or  associations  then  in  existence.  The  law  was  again 
amended  in  1885,  providing  that  the  capital  stock 
might  be  five  millions. 

The  law  was  further  amended  in  1887,  and,  among 
other  provisions,  exempted  the  capital  and  investments 
of  the  associations  from  taxation,  except  in  the  case  of 
real  estate  bid  in  by  the  association  under  some  lien 
held  thereon  by  the  association.  This  exemption  from 
taxation  may  account  for  the  great  "  boom  "  in  their 
organization  in  1887.  It  seems  that  the  reverse  of  the 
experience  of  most  States  is  occurring  in  Wisconsin. 
Secretaries  report  to  me  that  earlier  associations  were 
established  on  the  serial  plan  of  issuing  stock,  and  that 
many  of  the  latter  associations  are  upon  the  terminat- 
ing plan. 


62   CO-OPERATIVE   SAVINGS   AND   LOAN  ASSOCIATIONS. 

Michigan  and  Indiana. 

Concerning  loan  associations  in  Michigan  we  have 
no  data  beyond  the  fact  that  some  were  established 
there  many  years  ago ;  that  the  result  of  their  busi- 
ness, as  a  whole,  has  not  been  satisfactory,  and  they 
declined  in  popularity;  but  at  present  their  number 
is  increasing  again,  and  at  the  time  of  this  writing  a 
movement  is  on  foot  to  form  a  State  league. 

In  Indiana  their  number  has  been  increasing  re- 
cently with  great  rapidity,  especially  in  the  city  of 
Indianapolis.  Their  number  has  become  numerous 
enough  in  that  city  to  bring  into  existence  a  paper 
called  the  "Building  Association  Kegister."  Some 
time  ago  this  paper  stated  that  they  were  organizing 
at  the  rate  of  one  a  day  in  Indiana.  By  far  the  larger 
number  were  organizing  upon  the  terminating  plan. 
The  law  of  the  State  provides  no  uniformity  in  plan, 
and  the  result  is  the  same  here  as  elsewhere — there  is 
a  great  diversity  in  the  schemes  upon  which  their  busi- 
ness is  conducted. 

Our  data  is  insufficient  to  warrant  us  in  giving  any 
facts  further  than  we  have  already  stated. 

Minnesota. 

In  Minnesota,  loan  associations  have  attained  their 
greatest  development  in  the  twin  cities  of  Minneapolis 
and  St.  Paul.  No  statistics  have  so  far  been  collated 
by  an  official  bureau  of  the  State. 

The  fullest  information  we  have  been  able  to  ob- 
tain is  from  a  monograph  by  Albert  Shaw,  published 
in  September,  1886,  by  the  American  Economic  Asso- 
ciation, entitled  "  Co-operation  in  a  Western  City."  He 


GROWTH  AND  SPREAD.  63 

says:  "The  form  of  co-operative  enterprise  that  has 
attained  far  greater  results  in  the  United  States  than 
all  others  combined  is  that  of  the  well-known  and 
almost  invariably  successful  building  and  loan  associa- 
tion. Several  of  the  most  flourishing  building  and  loan 
associations  to  be  found  anywhere  in  the  country  are 
established  in  the  cities  of  Minneapolis  and  St.  Paul 
In  the  former  city,  the  first  was  organized  in  1874." 

Mr.  Shaw  tells  us  that,  in  Minneapolis,  "about  one 
thousand  homes  have  thus  far  been  secured  for  work- 
ingmen  by  the  building  and  loan  associations,  and 
their  operations  have  only  fairly  begun.  It  may  be 
reasonably  estimated  that  two  hundred  and  fifty  more 
families  will  be  domiciled  through  the  agency  of  the 
associations  in  1887,  and  that  the  number  will  increase 
a  hundred  a  year  thereafter  for  some  years  to  come, 
producing  results  not  only  of  great  consequence  eco- 
nomically, but  of  inestimable  moral  and  social  value." 

The  first  association  was  organized  in  St.  Paul  in 
1869.  The  idea  was  taken  there  by  one  Theodore 
Sanders  from  Philadelphia.  There  are  now  over  forty 
of  these  associations,  and  their  total  membership  "  must 
exceed  six  thousand,  representing  fully  one  fourth  of 
the  families  in  the  city.  Mr.  Shaw  further  says :  "  The 
estimate  that  from  eight  to  ten  thousand  homes  in  St. 
Paul  have  been,  in  whole  or  in  part,  secured  to  their 
owners  with  money  advanced  by  the  building  societies 
might  seem  extravagant ;  but  I  must  conclude  that  the 
facts  bear  it  out."  The  associations  in  these  two  cit- 
ies continue,  without  any  material  change,  the  present 
Philadelphia  systems  of  building  associations.  Asso- 
ciations have  been  established  at  Duluth  and  other 
places  in  the  State. 


64  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

Iowa,  Kansas,  and  Missouri. 

The  number  of  loan  associations  in  Iowa  is  not 
large.  The  first  was  organized  at  Burlington  in  1870, 
and  the  second  at  Keokuk  and  Oskaloosa  in  1872. 
There  are  some  at  Des  Moines  and  in  other  parts  of 
the  State.  There  has  recently  been  organized  at  Des 
Moines  what  is  called  the  "  Suburban-Home  Building 
Association,"  the  plan  of  which  is  to  buy  a  tract  of 
land  and  build  houses  thereon,  and  sell  the  same  to 
stockholders,  who  make  payments  weekly  or  monthly 
upon  the  general  plan  of  the  true  building  and  loan 
association.  Schemes  such  as  this,  have,  as  a  rule, 
brought  more  evil  than  good  to  the  stockholders.  In 
the  State  of  .New  York,  at  Kochester,  "building-lot 
associations,"  through  failure,  for  years,  placed  the  true 
building  and  loan  associations  in  disfavor.  The  asso- 
ciations of  this  class  are  very  largely  speculative,  and 
hence  wholly  outside  of  the  class  of  associations  which 
uniformly  prove  a  blessing  to  those  engaged,  and  friends 
of  true  co-operation  should  regard  them  with  suspicion. 

In  regard  to  Kansas  we  have  no  data  that  is  re- 
liable. 

In  Missouri,  loan  associations  have  been  growing 
with  great  rapidity  for  a  few  years.  Of  the  precise 
number  we  are  not  informed,  but  they  exceed  fifty  and 
may  reach  one  hundred.  A  question  of  great  interest 
to  them  is  now  in  litigation  in  the  courts  of  the  State. 
On  March  31,  1887,  the  laws  authorizing  their  incor- 
poration were  amended  in  many  particulars.  The 
amendatory  act  contained  a  provision  exempting  these 
associations  from  taxation,  on  the  ground  that  they 
were  benevolent  associations,  and  consequently  might 


GROWTH   AND   SPREAD.  65 

be  so  exempted  under  Article  X,  section  21  of  the 
Constitution  of  the  State.  The  Secretary  of  State 
disagreed  with  such  interpretation,  and  refused  to  issue 
certificates  of  incorporation  until  the  tax  upon  the 
capital  was  deposited  with  the  State  Treasurer,  to  be 
held  by  him  until  the  courts  passed  upon  the  validity 
of  the  act.  This  arrangement  was  entered  into  by 
some  thirty-four  associations.  The  result  of  this  liti- 
gation will  have  great  influence  upon  the  future  of 
these  associations  in  the  State  of  Missouri. 

Maryland. 

The  first  act  for  the  incorporation  of  loan  associa- 
tions was  passed  in  Maryland,  April  17,  1843 ;  but 
according  to  data  received  by  us  from  that  State  no 
association  was  formed  until  March,  1846.  An  associ- 
ation was  then  formed — the  organizers  meeting  in  a 
church  on  St.  Charles  Street — and  named  "  The  Balti- 
more Building  and  Loan  Association."  As  elsewhere, 
so  here,  the  first  associations  were  upon  the  terminat- 
ing plan,  but  of  late  the  serial  plan  is  taking  the  lead, 
until  three  fourths  of  the  associations  issue  their  stock 
upon  that  plan.  The  matured  value  of  a  share  is 
usually  fixed  at  $100,  and  dues  twenty-five  cents 
weekly,  payable  to  the  society  prior  to  the  stated 
weekly  meeting,  or  at  the  meeting.  Weekly  interest 
on  a  borrowed  share  is  placed  at  twelve  cents. 

Those  associations  have  been  quite  uniformly  suc- 
cessful in  this  State.  In  the  city  of  Baltimore  their 
membership  is  largely  artisans,  clerks,  and  railroad 
men — men  working  for  wages.  In  the  rural  parts  of 
the  State  there  are  some  associations  embracing  in 
their  membership  many  of  the  prominent  men  in  the 


66   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

community.  The  total  number  of  associations  in  the 
State  at  the  present  time,  as  we  are  informed  upon 
trustworthy  authority,  is  one  hundred  and  ninety-one, 
of  which  one  hundred  and  fifty-eight  are  located  in 
Baltimore.* 

Southern  States. 

"VVe  have  no  data  relating  to  the  extent  of  loan 
associations  in  the  Southern  States  beyond  that  con- 
tained in  Prof.  F.  B.  Sanborn's  report,  before  men- 
tioned, to  the  "  American  Social  Science  Association." 
We  quote  from  it  as  follows  : 

For  various  reasons,  some  of  which  are  stated  by  R.  T. 
Hill,  of  Texas,  in  his  report  concerning  provident  institu- 
tions in  the  extreme  Southwest,  there  have  been  few  accumu- 
lations of  savings  in  the  form  of  money  in  the  greater  part  of 
the  South.  The  number  of  savings-banks  there  is  small,  and 
building  associations  are  recent  and,  as  yet,  comparatively 
few.  Mr.  Hill  estimates  that  there  are  fifty  in  Texas,  which 
is  probably  more  than  in  any  of  the  former  slave-holding 
States,  unless  Maryland  be  an  exception.  They  are  numer- 
ous in  Missouri,  and  a  few  are  found  in  Arkansas,  Mississippi, 
Kentucky,  Tennesee.  Lousiana,  Alabama,  Georgia,  the  Caro- 
linas,  and  the  Virginias.  From  these  States,  however,  the 
committee  have  only  scanty  reports.  There  are  twenty  or 
more  associations  in  the  city  of  New  Orleans,  several  in  At- 
lanta, one  at  Georgetown,  S.  C.,  one  at  Key  West,  Fla.,  one 
at  Pensacola,  one  at  Selma,  Ala.,  one  at  Fort  Smith,  Ark., 
one  at  Lafayette,  La.,  one  at  Parkersburg,  W.  Va.,  one  each 
at  Yazoo  City  and  Columbus,  Miss.,  and  no  doubt  many 

*  These  figures  are  widely  divergent  from  estimates  of  their 
numbers  which  I  have  seen.  Rosenthal's  "  Manual  for  Building  and 
Loan  Associations,"  published  in  August,  1888,  at  Cincinnati, 
places  the  number  at  five  hundred  in  Baltimore.  We  believe  the 
figures  above  given  to  be  correct. 


GROWTH  AND  SPREAD.  67 

others  in  the  above-named  States.  In  Louisana  it  seems  that 
as  long  ago  as  1873  a  building  association  was  formed, 
which  ran  its  course  in  ten  years,  and  divided  its  profits 
among  its  members.  But  the  first  of  the  existing  New  Or- 
leans associations  was  organized  in  September,  1882,  and  has 
since  been  very  prosperous,  having  now  about  six  hundred 
members,  who  have  built  or  purchased  more  than  one  hun- 
dred homes  during  the  six  years  of  its  existence.  Several 
others  of  the  twenty  or  thirty  New  Orleans  associations  have 
from  three  hundred  to  six  hundred  members.  In  Tennesee 
the  associations  organized  in  1880-81  and  in  1885,  in  order 
to  secure  favorable  legislation,  formed  a  State  union,  which, 
at  its  organization,  included  six  associations  at  Memphis,/ 
four  at  Nashville,  and  four  or  five  others  in  different  parts  of 
Tennesee.  There  are  now  five  or  six  in  Chattanooga,  which 
during  seven  years  past  have  provided  homes  for  two  hun- 
dred and  fifty  families,  and  in  all  Tennesee  there  must  now 
be  upward  of  thirty  associations. 

Pacific  Coast. 

Our  data  is  meager  with  reference  to  the  Pacific 
coast.  Loan  associations  have  been  established  at 
various  points,  although  in  many  cases  the  scheme 
upon  which  they  are  conducted  is  unlike  that  of  the 
true  building  and  loan  association.  The  element  of 
real-estate  speculation  enters  into  their  scheme  to 
some  extent.  In  1887  there  were  in  California  eleven 
associations,  with  assets  of  $2,595,488,  represented  by 
30,000  shares. 

General  Remarks. 

Certain  facts  have  become  well  established  in  our 
investigations.  1.  That,  as  a  rule,  the  current  news- 
paper statements  and  some  of  the  book  literature  re- 
lating to  loan  associations  exaggerate  their  number  in 


68   CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONS. 

localities  and  States  where  they  are  most  numerous. 
2.  That,  in  their  early  development  in  almost  every 
State,  they  have  in  some  degree  become  speculative  in 
relation  to  real  estate,  which  in  the  end  has  generally 
proved  unsatisfactory,  and  in  many  cases  losses  were 
sustained  by  the  shareholders,  and  building  and  loan 
associations  ceased  to  be  popular.  Pennsylvania  has 
been  an  exception  to  some  extent,  and  explanation  is 
found  in  the  fact  that  in  that  State  there  has  been  a 
closer  following  of  the  true  principles.  The  law  of  the 
State  so  limited  the  number  of  shares  and  the  matured 
value  of  the  share  that  large  speculative  associations 
could  not  be  formed  under  the  law.  It  has  been  most 
fortunate  for  their  success  in  that  State.  3.  The 
State  of  Massachusetts  has  the  most  uniform  scheme 
throughout  of  any  State,  although  now  only  about  ten 
years  old.  The  early  history  of  co-operative  associa- 
tions in  the  State,  before  the  present  law,  was  not 
satisfactory.  New  York  has  one  law  for  their  forma- 
tion as  good  as  Massachusetts ;  but  its  trouble  lies  in 
the  fact  that  the  old  law  of  1851  remains  unrepealed, 
and  admits  of  all  sorts  of  schemes.  4.  There  is  at  the 
present  time  a  "  boom  "  in  these  associations  through- 
out a  large  part  of  the  United  States.  They  are  at- 
tracting attention  everywhere,  and,  as  a  factor  in  co- 
operation among  wage-earners  and  the  encouragement 
of  savings,  they  are  fast  becoming  the  most  prominent 
and  influential.  The  amount  of  savings  already  paid 
into  them  in  the  form  of  dues  in  many  States  exceeds 
the  deposits  in  savings-banks. 

The  total  number  in  the  United  States,  January  1, 
1889,  will  not  be  far  from  four  thousand.  To  speak 
of  the  total  number  of  shares  outstanding,  or  the  total 


GROWTH   AND   SPREAD.  69 

number  of  shareholders,  or  the  total  accumulations  in 
these  associations  throughout  the  whole  country,  would 
be  mere  guess-work,  and  we  will  not  enter  upon  it. 
We  earnestly  hope  that  the  next  census  will  include 
statistics  of  these  associations,  when  we  may  hope  for 
reliable  data  concerning  them  as  a  whole  throughout 
the  country. 


CHAPTER  V. 

A  REVIEW  OF  THE  DEVELOPMENT  OF  THE  SCHEMES 
UPON  WHICH  CO-OPERATIVE  SAVINGS  AND  LOAN 
ASSOCIATIONS  HAVE  BEEN  AND  ARE  NOW  CON- 
DUCTED. 

IT  is  our  aim  in  this  chapter  to  present  a  review  of 
the  advancement  made  in  the  manner  of  conducting 
the  class  of  associations  under  discussion.  This  calls 
for  an  examination  of  various  schemes  which  have 
been  and  are  now  in  operation,  and  the  reasons  that 
have  led  to  their  development  from  the  simple  build- 
ing association.  We  can  not  refer  to  all  the  modifi- 
cations that  have  arisen  in  the  various  schemes.  It  is 
the  principal  schemes,  and  the  more  important  modi- 
fications, that  we  shall  discuss.  We  will  first  refer  to 
the  manner  of  issuing 

Stock, 

In  the  primitive  building  associations  of  Philadel- 
phia, there  was  but  a  single  series  of  stock  issued ; 
every  person  taking  shares  of  stock,  subsequent  to  the 
date  of  the  first  issue  of  shares,  was  obliged  to  pay  back 
dues  in  order  to  be  in  the  same  position  he  would  have 
been  had  he  taken  his  stock  at  the  date  of  the  first 


REVIEW   OF  THE   DEVELOPMENT.  71 

issue ;  so  that  each  shareholder  paid  the  same  amount 
per  share  into  the  association  regardless  of  the  time 
when  he  took  his  shares.  The  money  was  loaned  only 
to  shareholders.  Inasmuch  as  only  one  series  of  stock 
was  issued  the  lifetime  of  the  association  was  limited 
to  the  time  that  it  took  for  the  shares  to  reach  their 
matured  value.  This  scheme  necessarily  involved  the 
condition  that  every  shareholder  remaining  in  the 
association  at  the  time  the  stock  matured  must  be  a 
borrower  to  the  amount  of  the  matured  value  of  shares 
held  by  him.  Let  us  make  this  clear.  Suppose  the 
charter  of  the  association  limited  the  number  of  shares 
it  could  issue  to  five  hundred,  and  that  during  its  life- 
time it  had  issued  that  number.  After  the  payment 
of  its  running  expenses,  the  funds  received  could  be 
used  for  only  two  purposes,  namely,  the  making  of 
loans  to  its  own  members  and  paying  shareholders  who 
withdrew.  Suppose  that,  of  the  five  hundred  shares 
issued,  three  hundred  had  been  withdrawn,  leaving  two 
hundred  outstanding  when  attaining  their  matured 
value.  Assume  the  shares  were  $200  each  at  their  ma- 
tured value.  Now  two  hundred  shares  at  $200  each,  is 
$40,000.  Before  the  shares  can  be  matured,  the  asso- 
ciation must  have  $40,000  of  assets.  The  assets  con- 
sist of  the  money  due  from  the  shareholders  to  the 
association  upon  loans.  As  no  shareholder  can  borrow 
a  larger  sum  than  the  matured  value  of  the  shares  held 
by  him,  it  follows  that  no  shareholder  can  owe  the 
association  for  borrowed  money  a  larger  sum  than  the 
association  will  owe  him  when  his  shares  of  stock  have 
matured ;  therefore,  each  shareholder  must  owe  the 
association  a  sum  equal  to  that  which  the  association 
will  owe  him  upon  his  matured  shares.  The  only  limi- 


72  CO-OPERATIVE  SAVINGS   AND  LOAN  ASSOCIATIONS. 

tation  or  exception  to  this  statement  of  the  case  will 
arise  in  reference  to  the  dues  paid  at  the  last  meeting. 
The  amount  of  those  dues  will  not  have  been  borrowed 
and  will  be  due  to  some  shareholder  or  shareholders 
in  excess  of  the  amount  owing  by  him  or  them  to  the 
association. 

But  as  the  association  progresses  from  year  to  year 
towards  the  maturity  of  its  stock,  it  might  not  happen 
that  there  are  shareholders  who  desired  to  borrow. 
What  then  ?  It  would  not  do  to  have  the  dues  paid 
in  from  month  to  month  remain  uninvested ;  no  profits 
would  accrue,  and  the  result  would  be  unsatisfactory. 
Under  the  scheme  of  a  single  series,  the  association 
has  the  power  to  compel  shareholders  to  borrow  the 
funds.  They  are  called  forced  loans ;  and  their  arti- 
cles of  association  and  by-laws  determine  who  should 
become  the  borrower  when  there  are  no  shareholders 
wishing  to  borrow. 

This  scheme  is  known  as  the  terminating  plan.  It 
involves  three  serious  defects  which  it  was  very  desir- 
able to  obviate,  namely,  the  dissolution  of  the  associa- 
tion when  the  stock  matured ;  the  large  amount  of 
back  dues  which  the  new  stockholder  would  have  to  pay 
who  took  stock  after  the  association  had  been  running 
for  some  time,  and,  lastly,  the  making  of  forced 
loans — that  is,  compelling  the  shareholder  to  become 
a  borrower,  whether  he  wanted  to  do  so  or  not. 

To  overcome  these  defects,  the  serial  scheme  was 
developed.  Under  this  scheme,  a  new  series  of  stock 
was  issued  at  the  beginning  of  each  fiscal  year,  or  half- 
yearly.  In  some  instances  series  have  been  issued 
quarterly,  and  even  of tener. 

This  is  known  as  the  serial  plan.     This  change  in 


REVIEW  OF  THE  DEVELOPMENT.  73 

the  scheme  obviated  two  of  the  defects  in  the  single- 
series  scheme.  It  permitted  the  association  to  become 
perpetual,  and  it  furnished  a  new  series  of  stock  so 
often  that  one  taking  stock  at  any  time  in  the  current 
series  did  not  have  a  large  amount  of  back  dues  to  pay 
to  place  him  in  the  same  situation  that  he  would  have 
been  had  he  taken  his  shares  at  the  first.  As  a  matter 
of  practical  experience,  the  serial  plan  also  obviates, 
except  in  rare  cases,  the  third  defect.  It  permits  of 
the  accession  of  new  stockholders,  who  become  such 
for  the  express  purpose  of  becoming  borrowers.  In  the 
single-series  scheme,  when  an  association  had  become 
two  or  more  years  old,  the  amount  of  back  dues  that 
they  would  have  to  pay  on  their  stock  in  order  to  be- 
come shareholders,  so  that  they  might  become  borrow- 
ers, was  a  serious  obstacle ;  while  under  the  serial  plan, 
the  amount  was  not  large  at  any  time.  In  a  well-man- 
aged association,  having  the  confidence  of  the  com- 
munity, there  is  usually  no  difficulty  in  finding  those 
who  wish  to  borrow  the  funds.  But  the  scheme  pro- 
vides a  mode  to  obviate  an  accumulation  of  funds  that 
can  not  be  loaned  by  providing  a  mode  for  compelling 
withdrawals.  In  the  serial  scheme  it  is  deemed  advis- 
able, when  a  series  matures,  to  have  but  comparatively 
few  outstanding  free  shares. 

Hence,  it  is  deemed  a  wise  policy  to  encourage 
withdrawals  in  series  approaching  maturity.  This  is 
accomplished  by  increasing  the  percentage  of  profits 
which  the  withdrawing  shareholder  is  allowed  as  the 
series  approaches  its  maturity. 

In  addition  to  this  policy,  many  associations  have 
provided  that  the  withdrawal  of  stock  may  be  com- 
pelled after  a  series  has  attained  a  certain  number  of 
6 


74:  CO-OPERATIVE   SAVINGS  AND   LOAN  ASSOCIATIONS. 

years.  In  the  case  of  a  compulsory  withdrawal,  the 
shareholder  is  allowed  all  the  profits.  The  scheme  of 
the  Massachusetts  co-operative  banks  has  this  pro- 
vision, the  number  of  years  being  placed  at  four  or 
more.  The  scheme  of  the  New  York  co-operative 
savings  and  loan  associations  has  the  same  provision, 
and  places  the  age  of  the  series  at  four  years  or  more. 

While  it  is  wise  to  thus  provide  a  mode  for  com- 
pelling withdrawals,  if  necessity  requires  it,  to  prevent 
the  accumulation  of  uninvested  funds,  there  will  sel- 
dom be  occasion  for  an  association  to  avail  itself  of  the 
provision. 

The  single-series,  or  terminating  plan,  has  been  al- 
most wholly  abandoned  in  localities  where  these  asso- 
ciations have  been  in  operation  long.  Most  of  those 
that  remain  in  such  localities  were  formed  years  ago, 
and  have  not  had  time  to  run  their  course  to  a  natural 
dissolution  by  the  maturing  of  their  stock. 

In  some  cases  where  an  association  is  formed  upon 
the  serial  plan,  each  series  has  been  conducted  sepa- 
rately, as  though  it  was  the  only  series  of  stock  the 
association  had  outstanding,  thereby  making,  in  effect, 
as  many  terminating  associations  running  under  one 
management  as  there  are  series  issued.  This  cumber- 
some mode  of  conducting  the  business  has  arisen  from 
the  fact  that  those  who  organized  and  conducted  the 
association  did  not  fully  comprehend  the  proper  mode 
of  conducting  the  business  in  cases  where  all  the  series 
are  run  together,  forming,  in  effect,  a  partnership. 

There  is  still  another  scheme,  which  has  assumed 
the  name  of  the  permanent  plan.  Under  this  scheme, 
stock  is  issued  at  any  time  when  there  is  a  demand 
for  it.  The  largest  association  in  the  State  of  New 


REVIEW  OF  THE   DEVELOPMENT.  75 

York,  the  Homestead  Fund  Association  of  Rochester, 
and  the  largest  in  the  State  of  Ohio,  the  Mutual  Home 
and  Savings  Association  of  Dayton,  issue  their  stock 
upon  this  scheme.  The  latter  association  is  one  of  the 
oldest,  most  successful,  and  largest  associations  in  the 
United  States.  This  scheme  no  more  deserves  the 
name  "  permanent  plan,"  than  the  serial  plan,  as  both 
make  the  existence  of  the  association  perpetual.  The 
associations  above  named  provide  in  their  scheme  for 
paying  cash  dividends  upon  matured  stock.  The  Day- 
ton company  also  allows  the  face  of  a  share  to  be  paid 
at  one  payment,  and  issues  thereupon  "  paid-up  stock  " 
upon  which  it  pays  dividends 

These  are  features  which  do  not  belong  to  the  true 
co-operative  savings  and  building-loan  associations. 
Especially  is  this  true  of  the  feature  of  issuing  paid-up 
stock.  This  plan  allows  the  capitalist  to  make  invest- 
ments in  its  stock  in  the  same  manner  that  he  would 
invest  in  the  stock  of  any  corporation  for  the  purpose 
of  deriving  profits  from  the  dividends  declared.  This 
is  not  allowed  in  States  where  a  well-drawn  statute  has 
been  enacted  to  regulate  the  business  of  loan  asso- 
ciations. 

Matured  Value  of  Stock. 

In  both  the  terminating  and  permanent  plans  there 
have  been  various  modifications  as  to  the  matured  value 
of  the  shares.  In  the  first  building  association — the 
Oxford  Provident  Building  Association,  in  Phila- 
delphia— the  matured  value  of  the  shares,  we  have 
seen,  was  $500.  The  third  one  formed — the  Frank- 
lin Building  Association — placed  the  matured  value 
of  shares  at  $200.  This  has  been  a  very  common 
"  matured  value  "  throughout  the  United  States ;  but 


76   CO-OPERATIVE   SAVINGS  AND   LOAN   ASSOCIATIONS. 

associations  have  been  formed  in  which  the  matured 
value  has  been  placed  at  $10,  $50,  $100,  $105,  $250, 
$300,  $500,  and  even  $1,000.  There  has  been  and  is 
now  great  diversity  as  to  the  matured  value  of  shares. 

Amount  and  Payment  of  Dues 

Both  the  terminating  and  permanent  plans  admit 
of  many  modifications  in  the  amount  and  payment  of 
dues,  and  many  have  been  developed.  We  have  already 
noted,  in  Chapter  IV,  that  the  dues  in  the  Oxford 
Provident  Building  Association  were  three  dollars  a 
month  on  each  share,  and  that  the  new  association  that 
succeeded  it  upon  its  dissolution  placed  the  monthly 
dues  at  the  same,  and  that  the  Franklin,  organized 
in  1845,  placed  its  dues  at  one  dollar  a  month  on  each 
share.  A  very  common  rate  of  dues  has  been  and  is 
now,  in  all  forms  of  these  associations,  one  dollar  a 
month  on  each  share. 

In  order  to  provide  for  smaller  savings  than  one 
dollar,  many  associations  have  been  formed  providing 
for  weekly  dues  of  twenty-five  cents  on  each  share ; 
and  when  the  matured  value  of  a  share  has  been  fixed 
at  ten  dollars,  monthly  dues  have  been  placed  at  five 
cents  a  share. 

Early  in  the  history  of  these  associations  in  Penn- 
sylvania, the  laws  of  the  State  fixed  the  matured  value 
of  shares  at  $200,  and  monthly  dues  at  one  dollar  a 
month  on  each  share.  In  the  first  building  associa- 
tion, according  to  our  information,  the  monthly  dues 
were  all  paid  on  a  certain  evening  in  each  month, 
between  seven  and  nine  o'clock.  At  these  monthly 
meetings  all  the  business  of  the  association  was  trans- 
acted, except  the  perfecting  of  its  loans.  This  has 


REVIEW   OF  THE  DEVELOPMENT.  f? 

been  the  most  common  mode  as  to  time  and  manner 
of  paying  dues ;  but  other  modes  have  come  into  use 
in  many  places.  One  has  been  for  the  association  to 
have  a  regular  office  at  which  the  secretary  or  treasurer 
could  be  found  at  certain  hours,  or  all  the  time,  to  re- 
ceive and  receipt  for  dues,  and  they  were  treated  as  if 
paid  at  the  regular  monthly  or  weekly  meeting.  This 
involves  greater  expense  in  conducting  the  business, 
and  from  this  mode  have  developed  associations  much 
unlike  the  true  building  and  loan  associations,  although 
classed  with  them. 

We  most  earnestly  indorse  the  mode  of  making  the 
dues  payable  once  a  month,  and  that  all  dues  be  paid 
between  certain  hours,  usually  in  the  evening,  to  be 
fixed  by  the  by-laws ;  and  that  they  be  received  and 
receipted  for  by  a  committee  of  the  directors,  the  sec- 
retary and  treasurer  assisting  them  if  the  committee 
desire  their  aid. 

Premiums. 

There  have  been  various  modifications  in  the  de- 
velopment of  the  scheme  of  building  associations  re- 
lating to  the  premium  paid  by  the  borrower.  These 
modifications  have  related  both  to  the  amount  and  the 
time  when  paid.  Let  us  inquire  as  to  what  is  a  pre- 
mium? In  the  common  language  of  the  business 
mart  it  is  a  bonus  which  the  borrower  pays  to  the  asso- 
ciation in  addition  to  interest  for  his  loan.  Is  there 
any  necessary  reason,  existing  in  the  scheme,  which 
calls  for  the  payment  of  any  premium  or  bonus  by  the 
borrower  at  all  ?  None  whatever,  beyond  the  question 
of  the  most  satisfactory  and  practical  method  of  de- 
ciding who  shall  borrow  a  certain  sum  of  money,  where 
several,  having  equal  right  to  borrow,  are  competing 


78  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

for  it.  What  is  the  effect  of  a  premium  by  a  borrower  ? 
It  increases  the  profits  of  the  association  and  the 
amount  of  the  dividends  to  be  added  to  the  shares. 
Who  pays  the  sum  that  thus  helps  to  swell  the  divi- 
dends beyond  legal  interest  ?  The  borrower,  of  course, 
who  pays  the  premium.  Does  the  borrower  get  any  of 
it  back  ?  Yes,  a  small  part  of  it.  How  ?  In  the  divi- 
dends added  to  his  shares.  How  great  a  part  of  it  does 
he  get  back  ?  The  part  that  he  gets  back  will  bear  the 
same  proportion  to  the  amount  paid  by  him  that  the 
value  of  the  shares  he  borrowed  upon  bears  to  the  value 
of  all  the  shares  of  the  association  outstanding  at  the 
time  the  next  dividend  is  made  after  he  pays  the  pre- 
mium. Suppose  all  shareholders  became  borrowers  for 
the  same  amount,  and  paid  the  same  amount  of  pre- 
mium. What  then  ?  Each  one  would  receive  back  in 
dividends  upon  his  shares  the  full  amount  of  premium, 
and  no  injustice  would  be  done ;  all  would  share  equally 
in  the  benefits  of  the  bonus,  and  each  bear  equally  its 
burden. 

But  will  all  shareholders  become  borrowers  to  the 
amount  of  their  shares  ?  No ;  except  in  the  single- 
series  plan,  where  they  are  compelled  to  borrow.  In 
the  serial  plan  only  a  small  part  of  the  shareholders 
can  become  borrowers.  What  becomes  of  the  greater 
part  of  the  premium  paid  to  the  association  in  this 
plan  ?  It  inures  to  the  benefit  of  the  non-borrowing 
shareholder.  Do  premiums  work  equity  between  the 
non-borrower  and  the  borrower  ?  Certainly  not.  The 
dividends  of  the  former  are  increased  without  bearing 
any  of  the  burden  that  increases  the  amount. 

It  is  in  this  matter  of  premiums  that  many  modi- 
fications in  the  scheme  of  building  associations  have 


REVIEW  OF  THE  DEVELOPMENT.  79 

worked  a  most  conspicuous  inequality  and  injustice 
in  the  benefits  accruing  to  shareholders.  They  have 
justly  rendered  the  building  and  loan  association  in 
some  places  odious.  Premiums  should  not,  we  insist, 
be  charged  or  allowed  except  for  one  purpose.  If 
there  is  $2,000,  or  any  other  sum,  to  loan,  and  only 
one  shareholder  that  wants  to  borrow  the  sum  at  the 
time  it  is  offered  for  loan,  he  should  have  it  without 
one  cent  premium  or  bonus.  If  two  or  more  share- 
holders wish  to  borrow  it,  the  right  to  loan  it  should 
be  sold  by  an  open  bidding  per  share ;  and  this  is  jus- 
tifiable only  upon  the  ground  that  in  the  long  run  it 
will  prove  the  most  satisfactory  and  practicable  method 
of  deciding  between  shareholders  desiring  to  borrow 
the  money  offered  for  loaning.  The  association  should 
discourage  the  bidding  of  large  premiums. 

Inequality  of  benefits  to  the  shareholders  is  not 
the  only  evil  effect  to  be  charged  to  the  system  of 
premiums ;  but  some  of  the  modifications,  in  fact 
nearly  all,  have  complicated  the  whole  scheme,  and 
made  it  hard  to  be  comprehended  by  the  uneducated, 
and  has  prevented  their  rapid  growth  and  the  extended 
beneficent  results  that  would  flow  from  a  just  scheme. 

The  several  schemes  relating  to  the  subject  of  pre- 
miums may  be  grouped  under  five  heads,  namely, 
"  The  Gross  Plan,"  "  The  Net  Plan,"  "  The  Install- 
ment Plan,"  "  The  Interest  Premium  Plan,"  and  «  The 
New  York  Plan." 

The  four  names  used  first  in  this  classification  are 
familiar  names  in  describing  the  schemes  they  desig- 
nate. The  fifth  we  have  assigned  to  the  plan  em- 
bodied in  the  New  York  Co-operative  Savings  and 
Loan  Association  scheme.  No  better  name  occurs  to 


80  CO-OPERATIVE   SAVINGS  AND   LOAN  ASSOCIATIONS. 

me  to  use  than  the  name  of  the  State  where  it  has 
been  definitely  adopted  by  a  general  law.  Let  us  first 
examine 

The  Gross  Plan. 

We  shall  assume  the  matured  value  to  be  $200.  In 
this  plan  the  borrower,  at  the  time  of  bidding  off  his 
loan,  bids  a  certain  per  cent  on  the  matured  value  of 
the  share,  or  a  certain  sum  per  share,  according  as  the 
scheme  of  the  association  provides.  The  amount  thus 
bid  is  deducted  from  the  matured  value,  and  the  bor- 
rower receives  only  the  remainder,  but  gives  security 
to  the  association  for  $200  a  share,  and  pays  interest  on 
that  sum.  To  illustrate  :  Suppose  the  successful  bidder 
at  the  sale  of  the  money  bids  twenty-five  per  cent,  or 
$50  a  share.  He  receives  $150,  and  gives  security  for 
$200  a  share,  and  pays  monthly  interest  at  the  rate  of  six 
per  cent  per  annum  on  $200.  If  he  continues  to  pay 
his  dues  and  interest  until  his  shares  of  stock  mature, 
the  value  of  the  shares  borrowed  upon  equal  the  loan, 
and  one  cancels  the  other.  Now,  the  real  cost  of  the 
loan  to  the  borrower  will  be  determined  by  the  length 
of  time  it  takes  the  shares  in  the  series  borrowed  upon 
to  mature.  The  length  of  that  time  will  be  deter- 
mined by  the  profits  of  the  association,  the  amount  of 
which  will  be  largely  determined  by  the  premiums 
bid  on  money  loaned.  If  all  the  money  loaned  by  the 
association  obtained  as  high  a  premium  as  above  men- 
tioned, the  share  would  mature  in  eight  or  nine  years, 
and  the  dues  paid  would  amount  to  from  $96  to  $108 
upon  each  share,  the  balance  of  the  matured  values  of 
the  shares  being  made  up  by  the  profits  added  to  the 
shares  in  dividends.  But  suppose  the  borrower,  in  the 
case  above  assumed,  paid  a  much  higher  premium  than 


REVIEW  OF  THE  DEVELOPMENT.  81 

was  generally  obtained  at  the  sales  of  money ;  then  it 
would  take  a  correspondingly  longer  time  for  his  shares 
to  mature,  and  he  would  have  to  continue  his  pay- 
ment of  dues  and  interest  a  longer  time  accordingly, 
and  the  expenses  of  the  loan  would  be  increased  in 
the  same  proportion. 

This  was  the  plan  adopted  in  the  first  building 
associations,  and  in  those  associations  there  was  but  a 
single  series  of  stock.  The  association  terminated 
with  the  maturity  of  the  shares. 

As  we  have  seen  before,  all  shareholders  remaining 
in  the  association  until  their  shares  matured  must 
necessarily  become  borrowers  to  the  amount  of  their 
stock,  less  only  the  dues  and  interest  paid  at  the  meet- 
ing when  the  stock  matured.  If  all  paid  the  same 
premium,  no  serious  injustice  would  be  done ;  but  if 
competition  was  spirited  at  one  meeting,  and  a  high 
rate  of  premiums  was  given — such  as  the  $50  a  share 
assumed  in  the  foregoing  illustration — and  at  another 
meeting  a  borrower  had  no  competition  and  obtained 
his  money  at  par,  there  would  arise  great  inequality 
in  the  expense  of  a  loan,  and  also  a  consequent  uncer- 
tainty as  to  the  length  of  time  it  would  take  the  shares 
of  stock  to  mature.  To  limit  this  uncertainty  and 
prevent  the  borrower,  at  a  time  when  there  was  no 
competition,  from  obtaining  his  loan  without  the  pay- 
ment of  a  premium,  the  custom  sprang,  up  of  fixing 
in  the  constitution  or  by-laws  a  minimum  premium  at 
which  the  bidding  for  loans  must  start.  When  the 
serial  or  permanent  association  came  into  existence,  it 
adopted  this  custom,  and  fixed  a  minimum  premium 
bid. 

The  first  association  with  which  the  writer  had  an 


82  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

acquaintance  was  organized  and  conducted  for  some 
years  on  the  scheme  of  requiring  a  minimum  premium 
of  $40  on  each  share.  The  highest  sum  the  borrower 
could  obtain  was  $160  a  share. 

In  the  early  days  of  building  and  loan  associations, 
as  compared  with  these  times,  money  commanded  a 
high  interest,  and  the  rate  of  six  per  cent  per  annum, 
which  the  borrower  paid  in  the  association,  was  below 
the  legal  rate  ;  hence,  if  he  obtained  his  loan  without 
any  premium,  the  association  would  not  obtain  legal 
interest.  It  seemed  eminently  proper,  therefore,  that 
the  borrower  should  pay  a  premium  of  some  amount. 

At  that  time  the  values  of  real  estate,  as  a  rule, 
were  advancing  in  the  localities  where  buildings  were 
being  erected  with  money  borrowed  from  loan  associa- 
tions, and  it  was  felt  that  the  non-borrower  was  en- 
titled to  large  interest  upon  the  money  which  he  paid 
into  the  association,  and  which  enabled  the  borrower 
to  obtain  his  loan,  and  thereby  be  able  to  own  his 
home,  and,  while  paying  for  it,  also  obtain  the  benefit 
of  the  rise  in  value  of  his  real  estate.  For  these  reasons 
a  high  rate  of  premiums  obtained  in  the  early  history 
of  the  building  and  loan  associations. 

The  question  may  well  arise  in  the  mind  of  the  in- 
quirer, in  the  event  the  borrower  desired  to  repay  his 
loan  before  his  shares  attained  their  matured  value, 
did  he  have  to  pay  the  full  two  hundred  dollars  on 
each  share  of  his  loan  ?  To  require  this  of  the  bor- 
rower would  manifestly  make  the  burden  of  the  bor- 
rower so  heavy  as  to  have  a  disastrous  effect  upon  the 
success  of  the  whole  scheme.  To  obviate  this,  a  sys- 
tem of  rebates  was  adopted.  By  the  law  of  Pennsyl- 
vania, passed  in  1859,  under  which  thereafter  building 


REVIEW  OF  THE  DEVELOPMENT.  83 

and  loan  associations  were  organized  and  incorporated 
in  that  State,  it  was  provided  that  a  borrower  repaying 
a  loan  within  eight  years  after  the  organization  of  the 
corporation  should  have  returned  to  him  one  eighth 
of  the  premium  for  each  of  the  eight  years  unexpired 
at  the  time  of  such  repayment. 

This  law  evidently  contemplated  a  single-series  sys- 
tem; but  the  principle  is  equally  applicable  to  the 
serial  system.  Instead  of  "  organization  of  the  corpo- 
ration," we  have  only  to  insert  within  eight  years  after 
the  series,  to  which  the  shares  borrowed  upon  belonged, 
was  issued,  and  the  plan  of  rebates  applies. 

This  rule  contemplates  the  maturing  of  shares  in 
eight  years ;  and  the  system  of  rebates  which  it  pro- 
vides for  is  simply  this :  If  the  borrower  has  paid  a 
premium  of  $50  a  share,  as  we  have  before  assumed, 
that  premium  is  divided  into  eight  parts — being  $6.25 
each.  If  the  borrower  repays  during  the  same  year  he 
borrowed,  he  repays  the  $150,  and  $6.25  in  addition, 
namely,  $156.25.  If  he  repays  during  the  second  year, 
he  must  pay  $162.50,  and  so  on,  increasing  $6.25  each 
year.  The  same  principle  applies  to  any  premium  bid. 

But  still  another  question  arises.  Suppose  the 
shares  were  issued  for  some  years  before  the  owner 
borrowed  upon  them.  In  the  serial  plan,  when  money 
is  offered  for  sale,  there  may  be  several  shareholders 
competing  for  the  money,  and  the  shares  of  stock  held 
by  each  have  been  issued  in  different  series ;  one,  for 
instance,  may  have  just  come  in  and  taken  stock  in 
the  current  series  for  the  purpose  of  becoming  a  bor- 
rower ;  another  one  may  have  had  and  paid  dues  upon 
his  stock  for  four  years.  Suppose  both  are  successful 
bidders  at  $50  premium.  From  what  we  have  stated 


84  CO-OPERATIVE  SAVINGS  AND   LOAN   ASSOCIATIONS. 

above,  it  is  clear  how  the  rebates  apply  to  the  borrower 
in  the  current  series ;  but  as  to  the  one  holding  shares 
four  years  old,  the  above  rule  would  not  apply.  As 
to  him,  the  rule  is  applied  in  this  manner :  The  bor- 
rower is  allowed  at  the  time  of  borrowing  a  rebate  of 
one  eighth  of  the  premium  for  each  full  year  the  series 
has  run  at  the  time  he  borrows.  Thus,  on  the  $50 
bid,  if  the  series  in  which  the  shares  were  issued,  upon 
which  the  borrower  is  obtaining  a  loan,  is  over  four 
years  old  and  less  than  five  years,  he  receives  $150  a 
share  and  four  eighths  of  the  premium  bid  by  him — 
so  that  he  would  receive  in  all  $175.  If  the  shares 
were  one  year  and  less  than  two  years  old,  the  borrower 
would  receive  $156.25. 

The  same  rules  we  have  stated  apply  to  a  system 
based  upon  a  scheme  in  which  it  is  assumed  that  the 
shares  will  mature  in  ten,  or  any  other  number  of 
years.  The  premium  bid  is  divided  into  as  many  parts 
as  the  scheme  assumes  it  will  take  for  the  shares  to 
mature,  and  whenever  a  loan  is  repaid,  a  rebate  is  made 
of  as  many  of  these  parts  of  the  premium  as  there  are 
years  remaining  of  the  time  it  is  assumed  it  will  take 
the  shares  to  mature ;  and  a  rebate  is  likewise  made 
from  the  premium  bid  at  the  time  of  borrowing,  of  as 
many  of  these  parts  of  the  premium  as  the  shares  bor- 
rowed upon  are  years  old.  It  is  apparent  that  the 
gross  plan,  with  its  system  of  rebates,  complicates  the 
book-keeping  of  the  association. 

To  illustrate :  Take  an  association  upon  the  serial 
plan,  in  which  it  is  assumed  that  eight  years  is  the 
requisite  time  for  a  share  to  mature,  and  which  issues 
a  new  series  of  stock  each  year.  Suppose  a  loan  is 
made  upon  ten  shares  belonging  to  the  current  series, 


REVIEW  OF  THE  DEVELOPMENT.  85 

at  a  premium  of  $50  per  share.  A  security  is  given  to 
the  association  for  $2,000.  This  is  the  face  value  of 
the  asset.  If  it  run  until  the  shares  borrowed  upon 
mature,  $2,000  will  be  paid  upon  it ;  but,  if  repaid  the 
same  year  it  was  given,  $1,562.50  will  cancel  it.  If 
not  paid  until  the  next  year,  it  will  take  $1,625  and 
so  on,  increasing  $62.50  each  year  until  the  eighth, 
when  it  will  take  $2,000.  Suppose  at  the  close  of  the 
fiscal  year  the  association  holds  $20,000  of  mortgages, 
at  their  face  value,  what  is  their  actual  value  ?  We 
certainly  can  not  say  their  actual  value  exceeds  a  sum 
that  will  cancel  them  if  paid  to  the  association.  To 
determine  what  sum  will  cancel  them,  we  must  ascertain 
how  much  rebate  each  share  borrowed  upon  in  making 
up  the  $20,000  of  loans  is  entitled  to  be  allowed  on  re- 
payment. The  total  of  such  rebates  deducted  from 
the  $20,000  will  give  us  their  actual  value ;  but,  to 
ascertain  the  sum  total  of  rebates,  we  must  know  the 
amount  of  premium  bid  on  each  of  the  one  hundred 
shares  borrowed  upon,  and  the  age  of  each  of  the 
shares.  From  these  intricacies  of  the  system  there 
came  into  use  the  terms  "  apparent  profits  "  and  "  act- 
ual profits,"  "  unearned  premiums  "  and  "  earned  pre- 
miums." Assume  each  of  the  one  hundred  shares 
above  to  have  sold  at  a  premium  of  $50 ;  it  is  clear  it 
only  took  $15,000  of  money  to  secure  the  $20,000  of 
mortgages.  Here  is  an  apparent  profit  of  $5,000,  but, 
as  we  have  before  seen,  if  all  the  shares  borrowed  upon 
belonged  to  the  current  series,  $15,625  would  cancel 
the  $20,000 ;  and  the  actual  profits  from  the  premiums 
is  only  $625  instead  of  $5,000.  Of  the  $5,000  of  pre- 
miums only  $625  is  "earned,"  and  the  remainder, 
$4,375,  is  as  yet  "unearned." 


86   CO-OPERATIVE   SAVINGS  AND   LOAN  ASSOCIATIONS. 

In  our  illustrations  we  have  assumed  the  simplest 
conditions  that  could  arise  under  the  rebate  system. 
Increase  the  mortgages  to  $100,000,  and  made  in  five 
different  series,  and  each  loan  paying  a  different  pre- 
mium, and  the  expert  accountant  will  be  appalled  with 
the  complexity,  unless  he  has  become  an  expert  in 
these  particular  accounts,  and  has  clearly  understood 
the  difference  between  "  earned  "  and  "  unearned  "  pre- 
miums, and  opened  his  books  and  kept  the  month  at 
basis. 

One  of  the  rocks  upon  which  many  building  and 
loan  associations  have  run  and  nearly  foundered  has 
been  this  "  unearned  premium."  Until  very  recently 
many  associations  opened  and  kept  their  accounts  as 
though  the  whole  premium  had  been  paid,  and  reck- 
oned their  assets  in  declaring  their  dividends  at  the 
face  value  of  their  securities,  instead  of  the  "  actual 
value  " ;  and  as  the  years  ran  by  and  rates  of  interest 
declined,  and  the  rate  of  the  minimum  premium  had 
to  be  lowered  in  order  to  obtain  borrowers  at  all,  and 
the  earlier  borrowers  from  any  cause  repaid  their  loans, 
the  rebates  which  had  to  be  allowed  to  them  necessa- 
rily came  out  of  current  profits,  and  the  result  was  to 
make  dividends  very  small  and  greatly  to  damage  the 
prosperity  of  the  association,  without  the  shareholders, 
as  a  mass,  being  able  to  clearly  understand  what  was 
the  difficulty.  This  consequence  was  obviated  by 
keeping  the  books  so  that  the  securities  were  only 
reckoned  at  their  actual  value ;  but  this  was  more  dif- 
ficult than  many  secretaries  and  organizers  knew  well 
how  to  do.  The  gross  plan,  with  its  system  of  rebates, 
is  too  complex  for  the  ordinary  wage- worker  to  readily 
understand,  or  for  any  one,  without  careful  study ;  and 


REVIEW  OF  THE  DEVELOPMENT.  87 

by  reason  of  its  intricacies,  and  sometimes  rank  in- 
equalities of  benefits  between  borrower  and  non-bor- 
rower, it  has  greatly  retarded  the  growth  of  loan  asso- 
ciations upon  simpler  and  more  equitable  schemes. 

The  Net  Plan. 

The  net  plan  was  the  next  to  develop.  Building 
and  loan  associations  came  into  existence  in  such  great 
numbers  in  Philadelphia  that  they  necessarily  had  to 
compete  with  each  other  for  shareholders ;  and  hence 
there  was  a  constant  tendency  to  modify  the  original 
scheme  so  that  the  new  association,  with  a  scheme 
changed  from  the  older  scheme,  would  appear  to  be 
better  for  the  borrower.  The  borrower  could  readily 
perceive  that  when  he  was  paying  six  per  cent  on  $200 
a  share  and  had  received  only  $150  or  $160,  he  was  in 
fact  paying  seven  or  eight  per  cent  for  the  use  of  his 
money.  To  obviate  this  apparent  high  rate  of  inter- 
est, a  new  scheme  was  devised  of  only  charging  six  per 
cent  interest  upon  the  sum  actually  received.  The 
security  would  be  given  to  the  association  for  the  prin- 
cipal sum  of  $200  a  share  and  for  the  payment  of  in- 
terest upon  the  sum  which  he  actually  received  after 
the  amount  of  his  premium  bid  was  deducted.  This 
came  to  be  known  as  the  "  net  plan,"  from  the  fact 
that  interest  was  paid  only  upon  the  net  sum  the  bor- 
rower received.  The  system  of  premiums,  with  the 
minimum  bid  and  rebates  of  the  gross  plan,  remained 
unchanged.  If  the  borrower  was  making  his  loan  upon 
shares  in  a  series  four  years  old,  he  was  allowed  four 
eighths  of  the  premium  bid,  if  the  association  was  or- 
ganized on  the  basis  of  eight  years  to  mature  its  shares. 
If  organized  on  the  basis  of  nine  years  to  reach  ma- 


88   CO-OPERATIVE   SAVINGS  AND  LOAN  ASSOCIATIONS. 

turity  of  shares,  he  was  allowed  four  ninths  of  the 
premium ;  if  organized  on  the  basis  of  ten  years,  then 
four  tenths  were  allowed ;  that  is,  the  net  sum  he 
would  receive  would  be  $200  a  share,  less  the  premium 
bid,  plus  four  eighths  or  four  ninths  or  four  tenths  of 
such  premium,  according  to  the  scheme  of  the  asso- 
ciations. 

If  borrowing  in  the  current  series — that  is,  the  last 
series  issued — the  net  sum  received  would  be  $200  a 
share,  less  the  total  premium  bid.  The  same  rebates 
from  the  face  value  of  the  security  were  allowed  on  re- 
payment of  the  loan  as  under  the  gross  plan.  In  brief, 
the  net  plan  varied  from  the  gross  plan  only  in  charg- 
ing the  borrower  interest  on  the  net  sum  received,  in- 
stead of  charging  him  interest  on  the  face  value  of  the 
security,  that  being  for  the  matured  value  of  each 
share  borrowed  upon.  This  scheme  was  better  for  the 
borrower,  provided  he  was  not  induced  by  reason  of 
the  apparent  advantage  to  him  in  the  matter  of  inter- 
est to  run  up  the  premium  bid  to  a  higher  rate  than 
he  would  have  done  under  the  gross  plan.  This  inter- 
est advantage  was  a  tempting  delusion  in  the  matter 
of  bidding  high  premiums. 

It  will  be  seen  that  the  net  plan  involved  all  the 
intricacies  and  complexities  of  the  gross  plan.  It  was 
an  improvement  to  the  borrower  who  understood  the 
plan  fully,  and  was  not  induced  thereby  to  bid  a  higher 
premium  than  he  would  otherwise  have  bid;  but  to 
the  unthinking  it  often  proved  a  delusion  and  a  snare. 

The  Installment  Plan. 

The  third  plan  evolved  in  the  history  of  building 
and  loan  associations  relating  to  premiums  is  known 


REVIEW  OF  THE  DEVELOPMENT.  89 

as  the  "installment  plan."  Associations  organized 
and  conducting  their  business  under  the  installment 
plan  are  subject  to  two  classifications.  In  the  first  the 
borrower  bids  a  premium  in  the  same  manner  as  under 
the  gross  and  net  plan;  but  instead  of  the  whole 
amount  of  the  premium  bid  being  deducted  from  the 
matured  value  of  the  share,  and  he  receiving  upon  his 
loan  only  the  balance,  the  premium  bid  is  divided  into 
as  many  parts  or  installments  as  the  scheme  of  the 
association  assumes  that  it  will  take  months  for  the 
shares  to  mature;  and  the  borrower  at  each  payment 
of  his  dues  and  interest  pays  one  of  these  installments 
of  the  premium  bid  by  him.  Under  this  arrangement, 
the  borrower  receives  $200  a  share  upon  his  loan,  or 
whatever  sum  constitutes  the  matured  value  of  the 
shares,  and  pays  interest  upon  that  sum  and  gives  a 
security  to  the  association  for  the  payment  of  the 
principal  sum,  and,  in  addition  thereto,  for  the  pay- 
ment of  the  installments  of  premium,  with  his  dues 
and  interest.  Thus,  if  a  borrower  in  the  current  series 
should  bid  a  premium  of  $50  a  share,  $200  being 
their  matured  value,  and  the  scheme  of  the  association 
assumes  that  nine  years  are  required  for  the  shares  to 
mature,  the  $50  premium  would  be  divided  into  one 
hundred  and  eight  installments,  of  which  one  part 
would  be  paid  with  each  payment  of  dues  and  interest. 
If  the  association  assumes  that  it  would  take  ten  years 
for  its  shares  to  mature,  then  the  $50  would  be  divided 
into  one  hundred  and  twenty  parts  or  installments, 
and  one  installment  would  be  paid  with  each  payment 
of  dues  and  interest. 

This  plan  was  a  great  advance  upon  the  gross  plan 
and  the  net  plan ;  under  it,  the  borrower  received  his 
7 


90   CO-OPERATIVE   SAVINGS  AND   LOAN  ASSOCIATIONS. 

full  $200  a  share,  and  he  could  readily  determine  how 
much  the  installment  of  premium  for  every  month 
increased  his  rate  of  interest  paid  for  the  use  of  the 
money. 

The  second  class  of  associations  organized  under 
this  plan  modified  the  first  scheme  by  dropping  out 
the  assumption  that  the  shares  would  mature  in  a  cer- 
tain number  of  months,  the  premium  bid  not  being  a 
gross  sum  divided  into  installments  for  the  purpose  of 
determining  the  amount  of  the  installment  to  be  paid 
each  month.  The  bid  is  made  solely  on  the  amount 
that  the  borrower  will  pay  each  month  for  the  use  of 
the  money,  in  addition  to  the  legal  interest.  The  bor- 
rower receives  $200  a  share  and  pays  interest  thereon, 
and,  in  addition  thereto,  such  sum  every  month  as  the 
bid  made  by  him  requires.  The  latter  form  of  the  in- 
stallment plan  has  justly  become  the  most  popular  of 
the  two,  and  we  think  is  now  generally  adopted  in  asso- 
ciations throughout  the  country  where  the  installment 
plan  is  in  operation.  Under  this  plan  the  borrower 
who  wishes  to  repay  his  loan  at  any  time  before  his 
shares  of  stock  have  matured  simply  pays  the  install- 
ment of  premium  up  to  the  time  of  the  payment  of 
his  loan.  It  will  be  observed  that  this  plan  or  scheme 
eliminates  the  complex  system  of  the  gross  and  net 
plan  with  reference  to  rebates,  and  very  much  simpli- 
fies the  account-keeping  of  the  association,  and  also 
simplifies  the  whole  scheme  of  the  association  to  such 
a  degree  that  it  can  be  readily  understood  by  men  of 
ordinary  intelligence. 

The  second  form  of  the  installment  plan  was  the 
one  adopted  by  the  law  of  Massachusetts,  providing 
for  the  incorporation  of  what  is  now  known  as  the 


REVIEW  OF  THE   DEVELOPMENT.  91 

"  co-operative  banks  "  of  the  State  of  Massachusetts ; 
and,  so  far  as  we  are  advised,  is  the  plan  generally 
pursued  by  associations  in  St.  Paul,  Minneapolis,  and 
Philadelphia. 

Premium  Interest  Plan. 

The  fourth  plan  or  scheme  relating  to  premiums, 
which  has  developed  in  recent  years  to  some  extent 
and  is  gaining  ground  in  some  localities,  is  the  "  pre- 
mium interest  plan."  This  plan  was  incorporated 
into  the  Massachusetts  scheme  of  co-operative  banks 
in  1882.  That  law  provides  that  any  corporation 
organized  under  the  act  providing  for  the  incorpora- 
tion of  co-operative  banks  may  provide  by  its  by-laws 
that  the  bid  for  loans  "  at  its  stated  monthly  meetings 
shall,  instead  of  a  premium,  be  a  rate  of  annual  inter- 
est upon  the  sum  desired,  payable  in  monthly  install- 
ments. Such  bids  shall  include  the  whole  interest  to 
be  paid  at  any  rate  not  less  than  five  per  centum  per 
annum." 

The  original  act  which  this  amends  provided  for 
that  form  of  the  installment  plan  in  which  the  bid 
was  a  certain  per  cent  upon  the  amount  loaned,  pay- 
able each  month.  Under  the  amendments  referred  to, 
the  co-operative  banks  are  given  the  option  of  the  in- 
stallment plan  or  to  confine  the  bidding  to  the  rate 
of  interest  to  be  paid  by  the  borrower,  the  money  to 
be  struck  off  to  the  borrower  who  bids  the  highest 
rate  of  interest  and  furnishes  satisfactory  security. 
It  will  be  noted  that  under  the  premium  interest  plan 
of  Massachusetts  the  minimum  rate  of  interest  shall 
not  be  fixed  by  the  by-laws  at  less  than  five  per  cent 
per  annum. 


92   CO-OPERATIVE   SAVINGS  AND   LOAN  ASSOCIATIONS. 

Associations  under  the  old  law  of  the  State  of  New 
York  may  be  organized  upon  any  of  the  plans  or 
schemes  to  which  we  have  already  referred;  and  of 
late  some  associations  have  been  organized  upon  the 
premium  interest  plan,  the  minimum  rate  of  interest 
being  fixed  at  five  per  cent  and  the  bidding  for  the 
loans  commencing  at  that  sum.  This  plan  of  premium 
is  a  great  advance  upon  the  gross  plan  and  net  plan 
with  their  system  of  rebates ;  and  it  is  claimed  by  its 
friends  to  be  also  an  advance  upon  the  installment 
plan,  as  it  simplifies  the  scheme  by  confining  the  bid- 
ding of  the  premium  solely  to  the  rate  of  interest. 
The  borrower  receives  $200  per  share,  and  pays  such 
rate  of  interest  per  month  as  his  bids  call  for. 

There  are  many  things  connected  with  this  plan  to 
commend  it,  and  its  friends  speak  very  strongly  in  its 
favor.  As  to  which  of  these  schemes  is  the  best  we 
shall  discuss  in  the  next  chapter. 

The  New  YorTc  Premium  Plan. 

As  we  have  before  stated,  we  name  the  fifth  plan  re- 
lating to  premiums  "  the  New  York  premium  plan,"  for 
the  reason  that  it  is  the  plan  incorporated  into  the  gen- 
eral law  of  this  State  providing  for  the  incorporation  of 
co-operative  savings  and  loan  associations.  The  gen- 
eral scheme  incorporated  into  the  statute  contemplates 
that  the  only  object  or  purpose  of  a  premium  being 
paid  by  the  borrower  is  to  determine  who  shall  become 
entitled  to  borrow  the  money  where  there  are  several 
bidding  for  it  who  are  equally  entitled  to  become  bor- 
rowers. That  the  selling  of  the  money  at  auction  to 
the  highest  bidder  is  the  most  practicable  manner  of 
determining  who  shall  borrow  the  money,  assuming, 


REVIEW   OF  THE   DEVELOPMENT.  93 

of  course,  that  each  borrower  has  ample  security  to 
offer  for  his  loan  according  to  the  requirements  of  the 
scheme  of  the  association.  The  borrower,  at  the  time 
of  his  bidding,  clearly  understands  that  whatever 
premium  he  bids  is  in  the  nature  of  a  bonus,  and  that 
the  amount  that  he  bids  is  deducted  from  his  loan 
at  the  time,  and  he  gives  security  to  the  association 
for  $200  a  share,  and  pays  interest  thereon,  and 
the  whole  premium  transaction  is  closed.  Under  this 
system,  high  rates  of  premium  will  not  be  bid,  and 
a  very  large  share  of  the  loans  made  will  pay  no 
premium  at  all.  The  general  law  provides  that  the 
rate  of  interest  to  be  paid  shall  be  determined  by  the 
by-laws  of  each  association.  The  object  of  this  pro- 
vision is  to  allow  associations  to  reduce  their  rates  of 
interest  as  the  general  legal  rate  of  interest  shall  de- 
cline. At  present  the  legal  rate  of  interest  in  New 
York  is  six  per  cent ;  and  associations  now  organizing 
under  this  statute  fix  their  rate  of  interest  at  that 
sum ;  but  in  case  the  rate  of  interest  should  be  placed 
at  five  per  cent  by  legislative  enactments,  the  associa- 
tions formed  under  this  act  could,  by  their  by-laws, 
change  their  rate  of  interest  accordingly.  Under  this 
plan  the  face  value  of  the  securities  represents  their 
actual  value,  and  every  security  held  by  the  association 
bears  the  same  rate  of  interest.  No  delusions  nor  snares 
are  held  out  to  the  borrower  to  lead  him  to  bid  a  high 
premium  on  the  ground  that  it  will  be  returned  to 
him.  The  whole  scheme  of  an  association  is  simplified 
to  such  a  degree  that  it  may  be  readily  understood  by 
all.  We  shall  further  discuss  the  merits  of  this  plan 
hereafter. 

We  have  now  described  the  five  plans  relating  to 


04  CO-OPERATIVE  SAVINGS  AND   LOAN   ASSOCIATIONS. 

the  subject  of  premiums.  There  are  various  modifica- 
tions of  these  several  types ;  but  it  is  not  our  purpose 
to  enter  into  the  discussion  of  them  in  detail. 

Many  associations  exist  which  seek  to  be  known  or 
classified  as  associations  of  the  class  we  are  discussing 
which  should  not  be  so  classified. 

It  is  an  essential  feature  of  building  and  loan  asso- 
ciations, co-operative  banks,  and  the  co-operative  sav- 
ings and  loan  associations  that  each  share  of  stock  of 
the  same  age,  whether  borrowed  upon  or  not,  shares 
equally  in  the  distribution  of  profits ;  but  there  is  a 
class  of  associations  where  the  borrower  is  excluded 
from  any  share  in  the  profits.  As  an  illustration  of 
such  a  scheme  we  quote  from  a  communication  to  the 
"  American  Building  Association  News,"  dated  at  Mt. 
Vernon,  Ind.,  February,  1888 : 

We  have  two  associations  here  working  on  the  following 
plan  :  Par  value  of  shares  $100,  dues  payable  weekly,  twenty- 
five  cents  per  share.  A  fixed  amount  of  $65  is  loaned  on  each 
share  borrowed  on  and  the  loans  run  five  years  from  date  of 
series  in  which  loan  is  made  ;  $65  you  will  notice  is  the 
amount  returned  to  the  association  in  dues  during  a  period  of 
five  years.  The  borrowing  members  pay  6  per  cent  weekly 
with  their  dues  on  the  net  amount  of  loan  ;  for  example,  a  loan 
of  ten  shares,  $650,  the  interest  for  the  first  year  at  6  per  cent 
is  $39  ;  the  second  year  interest  on  $520,  $31.20  ;  third  year 
interest  on  $390,  $23.40  ;  fourth  year  interest  $15.60  ;  fifth 
year  interest  $7.80  ;  no  premium  is  paid  by  the  borrower, 
and  each  series  of  stock  is  liquidated  at  the  end  of  five  years 
from  the  time  of  issue.  The  borrowers  have  their  mortgages 
cancelled,  and  the  non-borrowers  receive  the  net  amount  of 
profits  or  losses,  as  the  case  may  be,  up  to  that  time  on  each 
share  held,  including  dues  paid  on  the  same. 


REVIEW  OF  THE  DEVELOPMENT.  Q5 

An  association  of  this  nature  could  not  be  con- 
ducted under  the  laws  of  Pennsylvania,  Massachusetts, 
or  New  York. 

Another  scheme  for  associations  usually  classed  as 
building  and  loan  associations,  but  improperly  so,  al- 
lows the  shareholders  to  pay  a  gross  sum  at  the  begin- 
ning of  a  series,  in  lieu  of  monthly  or  weekly  dues, 
which  invested  at  a  certain  rate  of  interest  will  amount 
to  the  matured  value  of  a  share  in  the  association  in  a 
certain  number  of  years,  the  time  which  the  association 
assumes  that  it  will  take  the  stock  in  the  series  in 
which  the  shares  are  issued  to  mature. 

An  association  of  this  kind  is  speculative  and  in 
conflict  with  the  true  object  and  spirit  of  building  and 
loan  associations.  All  features  of  speculation  should 
be  eliminated  from  these  associations,  so  far  as  possi- 
ble, in  order  to  make  them  continuously  popular  and 
successful.  The  capital  of  all  associations  should  con- 
sist of  the  monthly  or  weekly  savings  of  its  members, 
with  profits  derived  therefrom  in  loaning  to  its  own 
members  or  shareholders.  Much  injury  has  come  to 
the  fame  of  the  true  co-operative  associations  for  sav- 
ings and  home-building  by  schemes  that  assume  their 
name  and  many  of  the  forms  of  doing  business,  but 
which  are  in  reality  only  schemes  by  which  the  money- 
lender obtains  large  interest  from  the  borrower.  They 
should  be  discouraged  by  every  friend  of  true  co-opera- 
tion among  wage-earners. 


CHAPTER   VI. 

WHICH    OF    THE    SEVERAL    SCHEMES    CONSIDERED    IS 
BEST. 

WE  have  now  before  us  a  general  outline  of  the 
several  schemes  upon  which  the  class  of  associations 
under  discussion  have  been  and  are  now  conducted. 

We  have  seen  something  of  their  history  and  de- 
velopment. The  literature  on  the  subject  is  very  mea- 
ger, and  hence  the  field  of  our  investigation  has  been 
limited.  We  have  passed  over  without  describing  many 
modifications  of  several  schemes  which  do  not  appear 
to  have  assumed  sufficient  importance  to  merit  a  sep- 
arate classification  and  name.  We  have  sufficient  data 
before  us,  however,  from  which  some  safe  conclusions 
may  be  derived. 

Before  proceeding  to  describe  in  detail  how  to  or- 
ganize these  associations,  the  details  of  management, 
and  the  proper  methods  for  keeping  the  books  of  ac- 
count, let  us  examine  which  of  the  several  schemes  or 
their  modifications  presented  seems  to  be  the  best. 

That  scheme  is  undoubtedly  the  best  which  secures 
an  equality  of  benefits  between  the  borrower  and  non- 
borrower,  simplicity  in  its  practical  workings,  and 
safety  in  the  highest  degree.  These  three  essential 
requisites  must  exist  in  any  scheme  to  become  de- 
servedly popular. 


THE   BEST  SCHEME.  97 

Safety  of  the  Scheme. 

All  the  schemes  we  have  described  have  the  essen- 
tial requisite  of  safety  in  nearly  the  same  degree. 
They  all  require,  as  a  rule,  the  same  kind  of  security 
for  their  loans,  namely,  first  bond  and  mortgage,  or  a 
pledge  of  their  own  stock  upon  which  there  has  been 
paid  into  the  association  a  sum  equal  to  the  amount 
loaned  and  six  months'  interest  on  the  loan.  The 
latter  gives  to  the  association  absolute  security,  as  we 
have  seen;  all  risk  upon  the  loan  is,  in  fact,  elimi- 
nated. 

The  safety  of  loans  made  upon  bond  and  mortgage 
•depends  in  all  the  schemes  on  the  same  conditions. 
These  conditions  may  be  briefly  stated  as  follows :  1. 
The  good  judgment,  experience,  and  integrity  of  those 
who  examine  and  appraise  the  value  of  the  real  estate 
offered  to  the  associations  as  a  security  for  loans.  2. 
The  knowledge  and  accuracy  of  those  charged  with 
examining  titles  and  making  abstracts  of  the  same. 
3.  The  percentage  of  margin  which  is  required  be- 
tween the  value  of  the  mortgaged  premises  and  the 
amount  loaned.  4.  The  condition  of  the  real-estate 
market,  when  the  loan  is  made,  as  to  whether  it  is 
normal,  inflated,  or  depressed.  5.  In  those  loans 
where  the  fire  insurance  upon  the  buildings  is  a  part 
of  the  security  relied  upon,  the  watchfulness  of  the 
officer,  whose  duty  it  is  to  see  that  the  insurance  does 
not  expire  and  leave  the  building  without  insurance ; 
and  carefulness  in  selecting  companies  to  carry  risks 
that  are  able  and  willing  to  pay  in  case  of  loss. 

All  the  foregoing  conditions  of  safety  may  be  ful- 
filled under  any  scheme,  either  carefully  or  negligent- 


98   CO-OPERATIVE   SAVINGS  AND   LOAN   ASSOCIATIONS. 

ly,  intelligently  or  ignorantly,  honestly  or  dishonestly. 
The  intelligence  and  character  of  the  officers  whom  the 
shareholders  select  to  conduct  the  affairs  of  the  asso- 
ciation are  of  first  importance  always ;  and  no  scheme 
can  relieve  the  shareholders  from  the  greatest  care  in 
this  selection.  The  most  that  any  scheme  can  do  is  to 
provide  all  the  elements  of  safety  possible. 

Receiving  Dues,  Interest,  and  Fines. 

We  have  seen  that  two  modes  are  pursued  in  re- 
ceiving dues,  interest,  and  fines. 

The  first  is  for  the  board  of  directors,  or  a  com- 
mittee thereof,  to  hold  regular  stated  meetings,  weekly 
or  monthly,  according  to  the  scheme  of  the  association,- 
for  the  receipt  of  dues,  interest,  and  fines,  and  of  install- 
ments of  premium  .when  the  scheme  is  upon  that  plan. 
No  officer  has  the  right,  on  behalf  of  the  association, 
to  receive  payments  from  the  shareholders  at  any  other 
time. 

The  second  mode  is  to  require  the  payments  to  be 
made  to  the  secretary  or  treasurer,  or  permit  them  to 
be  made  at  any  time  during  the  week  or  month  at  the 
office  of  the  association,  the  officer,  in  order  to  accom- 
modate the  shareholder,  having  regular  office-hours  for 
the  purpose. 

Of  these  two  modes,  it  is  proper  here  to  inquire 
which  is  best.  It  is  manifest  that  if  the  receiving  of 
dues,  interest,  fines,  etc.,  is  devolved  upon  a  single 
officer,  such  as  the  secretary,  and  he  has  an  office,  and 
is  to  be  found  there  during  business  hours,  and  also  at 
stated  times  in  the  evening,  it  gives  to  each  stockhold- 
er the  advantage  of  selecting  his  own  time  during  the 
week  or  month,  according  to  his  convenience,  for  mak- 


THE  BEST   SCHEME.  99 

ing  his  payments;  and  again,  it  is  clear  that  if  an 
association  is  prosperous  and  increases  the  number  of 
its  shareholders  without  any  limitation,  they  may  be- 
come so  numerous  that  there  will  not  be  sufficient  time 
at  an  evening  meeting  for  any  committee  to  receive 
and  receipt  for  all  the  payments  then  due.  In  such 
cases  a  regular  officer,  located  in  an  office  for  the  re- 
ceiving of  dues,  interest,  fines,  etc.,  becomes  a  neces- 
sity. 

The  answer  to  the  question  raised  will  be  made 
differently  by  different  persons,  according  to  their  con- 
ception of  the  true  mission  of  loan  associations.  For 
myself,  I  do  not  believe  that  the  shareholders  of  any 
association  should  be  permitted  to  become  so  numer- 
ous that  payments  can  not  be  handled  in  a  single  even- 
ing by  the  proper  committee.  For, a  single  officer  to 
receive  the  dues  at  any  time  must  inevitably  tend  to 
centralize  the  running  of  the  association  in  the  hands 
of  that  officer.  It  is  with  him  that  all  the  stockhold- 
ers become  acquainted,  and  not  with  the  other  officers 
to  the  same  extent;  nor  do  they  become  acquainted 
with  one  another.  They  go  and  pay  their  dues  when 
convenient,  and  then  go  about  their  business.  It  be- 
comes to  them  much  like  depositing  in  a  bank.  It 
necessarily  involves  additional  expenses  in  conducting 
the  business,  while  it  leaves  a  door  wide  open  for  de- 
falcations and  ring  methods  in  the  management  of  the 
association. 

On  the  other  hand,  the  stated  meeting  for  the  pay- 
ment of  dues  and  the  receipt  thereof  by  a  proper  com- 
mittee tends  to  bring  all  the  stockholders  together  at 
regular  intervals.  They  meet  one  another  and  all  the 
board  of  directors.  When  it  is  not  convenient  to  at- 


100  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

tend  a  meeting  the  money  and  pass-book  can  be  sent 
by  some  friend.  By  this  means  all  become  better 
acquainted  with  the  scheme  of  the  association,  and 
more  interested  in  the  manner  in  which  its  business 
is  conducted.  When  the  sales  of  money  immediately 
follow  the  receipt  of  dues  many  persons  will  remain  to 
attend  the  sales.  If  there  is  a  slack  demand  by  bor- 
rowers the  interest  of  shareholders  will  be  aroused  in 
looking  about  among  their  friends  for  those  who  wish 
to  borrow,  and  soliciting  them  to  join  the  association, 
explaining  to  them  its  workings  and  the  benefits  to  be 
derived  from  joining  it.  Under  such  conditions  the 
association  becomes  an  educator. 

These  are  some  of  the  reasons  which  lead  us  to 
prefer  the  stated  meeting  for  the  receipt  of  dues  ;  and 
we  believe  its  wisdom  is  completely  established  by  the 
fact  that  in  those  localities  where  that  method  has 
been  most  commonly  followed  loan  associations  have 
attained  their  greatest  success.  There  is  an  element 
of  safety  in  it  which  can  not  be  obtained  under  the 
other  mode. 

Weekly  or  Monthly  Dues. 

An  examination  of  loan  associations  through  the 
country  will  show  the  fact  that  weekly  dues  are  most 
often  associated  with  the  scheme  of  a  single  officer  re- 
ceiving the  dues.  There  are  classes  in  some  localities 
with  whom  weekly  dues  are  advantageous,  but  in  most 
instances  the  monthly  scheme  answers  every  end. 

Simplicity  of  the  Scheme. 

Of  two  or  more  schemes,  each  having  the  essential 
requisites  of  securing  an  equality  of  benefits  between 
the  borrower  and  non-borrower,  and  safety  in  sub- 


THE   BEST  SCHEME.  101 

stantially  the  same  degree,  that  scheme  is  best  which 
is  least  complex  in  its  practical  workings.  These  asso- 
ciations are  intended  for  the 'wage- earning  classes ;  for 
men  of  moderate  means,  men  whose  business  expe- 
rience is  not  large  or  varied,  and  hence  the  scheme 
adopted  should  be  one  that  can  be  readily  understood 
by  them.  The  issuing  of  stock  and  the  payment  of 
one  dollar  dues  on  each  share  until  it  arrives  at  the 
value  of  $200  is  a  simple  arrangement.  In  case  of  a 
withdrawal,  the  giving  of  a  thirty  days'  notice  and  re- 
ceiving back  the  dues  paid  and  a  certain  percentage  of 
the  profits  which  have  accrued,  is  a  simple  proceeding 
that  all  can  understand.  The  loaning  of  money  at 
each  meeting  to  the  highest  bidder  is  easily  under- 
stood, when  the  premium  bid  is  treated  as,  and  under- 
stood to  be,  a  bonus,  and  the  borrower  receives  $200  a 
share  less  the  premium  per  share  he  has  bid,  and  gives 
a  security  for  the  $200  and  pays  interest  monthly  at  6 
per  cent  or  any  other  rate  fixed  by  the  association, 
and  continues  to  pay  his  dues  until  the  shares  are  ma- 
tured and  one  cancels  the  other — or  if  he  repay  his 
loan,  before  the  shares  mature  and  the  amount  to  pay 
is  the  sum  he  has  given  security  for,  the  whole  pro- 
ceeding is  simple  and  straightforward:  The  book- 
keeping in  cases  like  this  is  simple,  and  a  stockholder 
or  auditing  committee  can  easily  at  any  time  arrive  at 
the  condition  of  the  association. 

But  change  this  form  of  premium  to  a  system 
whereby  it  is  assumed  that  it  will  take  ten  years  for 
the  shares  to  mature,  and  then  divide  the  premium 
into  ten  parts,  and  deduct  them  all  from  the  amount 
of  money  the  borrower  receives,  if  he  is  borrowing 
upon  shares  in  the  current  series,  and  require  him  to 


102  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

give  a  security  for  the  full  $200  a  share  and  pay  inter- 
est on  that  sum,  and  tell  him  that  if  he  wishes  to  re- 
pay his  loan  before  the  shares  borrowed  upon  mature 
the  association  will  allow  a  rebate  on  the  premium  bid 
of  as  many  tenth  parts  of  the  same  as  there  are  full  years 
remaining  out  of  said  ten  years  at  the  time  he  repays 
the  loan,  the  whole  proceeding  becomes  complex,  and 
can  not  be  comprehended  in  its  full  effect  without  a 
study  more  difficult  and  patient  than  the  average  arti- 
san will  give  it.  Such  is  the  gross  plan,  with  its 
system  of  rebates.  It  is  complex  beyond  ordinary 
comprehension,  and  complicates  the  accounts  of  the 
association  to  such  a  degree  that  an  ordinary  business 
man,  when  placed  upon  an  auditing  committee  can 
not  verify  the  accuracy  of  the  annual  statement  with- 
out greater  labor  than  he  can  or  will  bestow  upon  it. 

It  does  not  relieve  the  complexity  by  adopting  the 
net  plan — the  only  change  in  this  being  that  the  bor- 
rower pays  interest  on  the  actual  sum  which  he  re- 
ceives. This,  in  fact,  still  further  complicates  an 
examination  of  the  accounts.  Before  an  auditing  com- 
mittee can  determine  whether  John  Doe,  a  borrower, 
is  paying  or  has  paid  the  amount  of  interest  he  ought 
to  pay,  they  must  ascertain  the  amount  of  premium  he 
bid  on  his  loan,  and  deduct  that  from  $200  to  ascertain 
the  amount  upon  which  he  should  pay  interest ;  and 
not  only  that,  but  they  must  ascertain  how  old  the 
series  was  when  he  borrowed,  so  that  they  may  deter- 
mine the  amount  of  rebate  he  had  on  the  premium 
bid.  This  must  be  done  with  reference  to  every  loan 
outstanding. 

This  complication  is  somewhat  relieved  under  the 
installment  plan,  in  which  the  borrower  receives  the 


THE  BEST  SCHEME.  103 

full  sum  of  $200,  and  pays  the  premium  in  monthly 
installments,  with  his  dues  and  interest ;  but  it  still 
remains  complicated.  It  involves  the  examination  as 
to  the  amount  of  premium  bid  upon  each  loan,  in 
order  to  determine  whether  the  installment  actually 
paid  is  the  right  one. 

The  fourth  plan,  which  is  regarded  with  much 
favor  in  many  localities,  and  especially  in  the  co-opera- 
tive bank  scheme  of  Massachusetts,  where  the  pre- 
mium bid  may  be,  if  the  association  so  elects,  upon 
rate  of  interest  to  be  paid  for  the  loan,  is  subject  to 
the  same  objection  as  the  installment  plan.  To  deter- 
mine the  amount  of  interest  which  ought  to  be  paid, 
the  amount  of  interest  bid  on  each  loan  must  be  ascer- 
tained. 

Many  associations  in  New  York,  under  the  old  law, 
adopted  the  policy  of  fixing  a  low  rate  of  interest  as 
the  minimum,  and  then  borrowers  bid  up  the  rate  in 
the  competition  for  money.  There  are  many  things 
to  commend  premium  -  interest  bidding,  but  this 
scheme  is  at  the  expense  of  simplicity  in  the  practical 
workings  of  the  business  of  the  association.  As  re- 
gards the  essential  requisite  of  simplicity  in  the  prac- 
tical workings  of  the  associations,  it  seems  clear  that 
the  scheme  of  the  co-operative  savings  and  loan  asso- 
ciations of  New  York  is  superior  to  any  other. 

Equality  of  Benefits. 

Equality  of  benefits  between  the  borrower  and  the 
non-borrower  must  be  secured  in  these  associations  to 
justly  entitle  them  to  the  name  of  co-operative  asso- 
ciations. 

If  the  scheme  upon  which  they  are  conducted  in- 


104  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

volves  the  fleecing  of  the  borrower  by  the  free  share- 
holder— the  one  who  does  not  borrow — they  cease  to 
be  what  is  claimed  for  them.  The  effect  in  the  stimu- 
lation of  savings  and  in  furnishing  facilities  therefor, 
in  encouraging  home-building,  and  making  the  attain- 
ment of  a  home  possible  to  the  wage-worker,  has  been 
so  great  that  these  associations  have  been  almost  uni- 
formly successful,  accomplishing  much  good,  notwith- 
standing considerable  injustice  involved  in  the  prac- 
tical workings  of  the  system  between  borrower  and 
non-borrower — the  former  paying  a  very  large  interest 
and  the  latter  receiving  it.  The  borrower  too  often 
undertakes  obligations  which  he  does  not  fully  com- 
prehend until  it  is  too  late  for  him  to  recede,  and  if 
he  attempts  to  free  himself  from  the  burden  he  only 
still  further  swells  the  profits  of  those  who  do  not 
borrow. 

We  shall  assume  that  the  scheme  which  has  the 
essential  elements  of  simplicity  in  its  practical  work- 
ings and  safety,  and,  at  the  same  time,  secures  the 
greatest  equality  between  the  borrower  and  the  free 
shareholder,  is  the  best.  We  assume  this,  because  it 
seems  to  us  to  admit  of  no  dispute. 

The  total  sources  of  profits  of  an  association  arise 
from  premiums,  interest,  fines,  entrance  -  fees,  and 
transfer-fees.  If,  perchance,  in  the  course  of  its  busi- 
ness in  the  enforcement  of  securities  upon  defaulted 
loans,  it  becomes  the  owner  of  real  estate,  rents  re- 
ceived, as  well  as  any  advance  realized  upon  its  resale 
above  actual  costs  to  the  association,  belong  to  profits. 
But  these  are  chance  profits ;  they  are  not  the  sources 
from  which,  under  the  ordinary  workings  of  the 
scheme,  profits  are  expected  to  be  realized,  so  we  shall 


THE  BEST  SCHEME.  1Q5 

not  refer  to  them  again,  but  shall  leave  the  enumera- 
tion above  to  stand,  with  one  addition  thereto — while 
the  sources  above  enumerated  constitute  all  the  sources 
from  which  the  business  of  the  association  derives 
gain,  as  between  the  stockholders,  there  is  yet  another 
source  of  profit,  and  an  important  one. 

We  have,  in  Chapter  III,  fully  explained  the  dif- 
ference between  the  holding  value  and  the  withdraw- 
ing value  of  shares.  Now,  whenever  a  shareholder 
withdraws  he  leaves  in  the  treasury  of  the  association 
the  difference  between  these  two  values,  which  inures 
to  the  benefit  of  the  shareholders  who  do  not  with- 
draw, and  constitutes  a  portion  of  the  profits  to  be 
divided  at  the  next  distribution. 

The  necessary  expenses  of  conducting  the  business 
of  an  association  will,  as  a  rule,  exceed  the  sum  re- 
ceived from  entrance-fees,  transfer-fees,  and  fines,  so 
that  the  amount  of  profits  to  be  divided  at  each  distri- 
bution will  not  exceed  the  sum  received  since  the  last 
distribution  from  premiums  and  interest  and  profits 
left  by  withdrawing  shareholders. 

Now  let  us  cast  out  of  these  items  the  premium 
paid,  and  assume  that  the  interest  paid  is  simply  the 
legal  rate.  It  is  manifest  that  the  borrower  and  non- 
borrower  are  receiving  equal  benefits.  The  borrower 
pays  his  monthly  interest,  and  has  value  received,  in 
return  therefor,  in  the  loan  that  has  been  made  to 
him.  The  non-borrower,  who  is  availing  himself  of 
the  association  as  a  place  to  accumulate  his  savings,  is 
obtaining  better  advantages  than  he  can  obtain  else- 
where, when  he  is  able  to  secure  the  legal  rate  of  in- 
terest upon  his  savings  paid  in  from  month  to  month. 

The  borrower  obtains  the  advantages  of  being  able 
8 


106   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

to  pay  interest  in  small  sums  from  month  to  month, 
and  likewise  monthly  payments  in  addition  as  dues 
upon  his  stock,  which  in  time  shall  wipe  out  his  loan. 
This  secures  equality  between  the  borrower  and  non- 
borrower,  and  both  reap  a  benefit  without  loss  to  the 
other.  The  distribution  of  interest  and  the  profits  left 
by  the  withdrawing  shareholder,  in  the  form  of  divi- 
dends to  the  holding  value  of  the  respective  shares 
held  by  the  borrower  and  non-borrower,  is  just,  and 
works  equity  between  all  parties  concerned ;  but  it  is 
otherwise  with  the  item  of  premiums. 

If  all  borrowers  bid  the  same  premium  and  the 
premium  received  by  the  association  was  distributed 
among  the  shares  borrowed  upon,  then  there  would  be 
an  equality  of  benefits ;  but  such  is  not  the  scheme. 
Premiums,  as  well  as  other  items  of  profits,  are  bunched 
and  divided  among  all  the  shares  outstanding  accord- 
ing to  their  holding  value. 

It  needs  no  array  of  figures  to  show  that  when  the 
free  shareholder  receives  10  per  cent  interest  on  his 
savings  in  a  community  where  the  legal  rate  is  but  6, 
that  the  borrower  has  paid  either  in  premium  or  inter- 
est far  above  the  current  rate.  We  have  in  Chapter 
IV  written  to  some  extent  on  this  question.  It  is  in- 
evitable that  if  the  association  is  one  in  which  free 
shareholders  obtain  large  interest  it  is  one  in  which 
the  borrower  will  pay  large  interest,  either  under  the 
name  of  interest  or  premiums. 

It  may  be  of  service  in  the  consideration  of  this 
subject  to  obtain  some  correct  notion  of  the  relative 
number  of  borrowers  and  non-borrowers  in  these  asso- 
ciations. 

At  the  date  of  the  annual  report  for  1886  of  the 


THE  BEST  SCHEME.  1Q7 

Savings-Bank  Commissioners  of  Massachusetts,  there 
were  forty  co-operative  banks  in  that  State,  having 
14,805  shareholders ;  of  this  number  only  2,960  were 
borrowers.  There  were  outstanding  98,783  shares  of 
stock ;  but,  unfortunately,  the  fact  is  not  compiled  as 
to  the  number  of  shares  borrowed  upon.  From  an  ex- 
amination of  the  report  of  the  "  Bureau  of  Statistics  of 
Labor  and  Industries  "  of  New  Jersey  for  1886,  where- 
in they  have  tabulated  certain  facts  with  reference  to 
156  building  and  loan  associations  in  that  State,  we 
find  the  total  number  of  shareholders  37,730,  of  which 
only  8,562  are  borrowers.  The  total  number  of  shares 
outstanding  is  204,653,  of  which  only  42,373  have 
been  borrowed  upon. 

There  is  located  at  Elmira,  New  York,  an  associa- 
tion organized  upon  the  serial  plan :  Matured  value  of 
shares,  $200 ;  monthly  dues,  one  dollar ;  issuing  a  new 
series  of  stock  each  year,  and  has  matured  three  series 
of  stock.  It  now  issues  and  matures  a  series  each 
year.  Its  thirteenth  annual  report  shows  outstanding 
3,510  shares  in  all  series,  of  which  812  have  been  bor- 
rowed upon. 

From  our  investigation  and  from  the  necessity  of 
the  scheme  of  these  associations,  we  conclude  that  the 
ratio  of  non-borrowers  to  borrowers  will,  on  the  aver- 
age, exceed  four  to  one. 

From  this  it  follows  that  excessive  interest  and  pre- 
miums paid  by  the  borrowers  may  be  divided  into  four 
parts  at  least,  and  only  one  of  these  parts  will  be  re- 
turned to  the  borrowers  in  dividends  to  their  stock 
while  the  remaining  three  parts  will  be  divided  to  the 
free  shares.  While  this  conclusion  is  not  accurate,  it 
is  approximately  so. 


108  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

We  feel  it  needs  no  argument  to  prove  that  the  old 
gross  plan,  requiring  a  premium  bid  of  $25  a  share,  or 
even  more,  and  payment  of  interest  on  $200 — while  the 
most  the  borrower  could  receive  on  his  loan  was  $175 
a  share — worked  rank  injustice. 

The  first  association  in  which  the  writer  was  a 
shareholder  required  a  minimum  premium  bid  of  $40  a 
share.  The  promise  was  held  out  to  the  borrower  that 
he  would  get  his  premium  back  in  dividends  upon  his 
shares.  We  have  seen  that  he  would  not  get  back 
more  than  one  fourth  of  it.  The  free  shareholders 
received  the  other  three  fourths.  Under  this  system 
the  free  shareholder  who  remained  until  his  shares 
matured  would  receive  from  12  to  18  per  cent  interest. 

The  system  could  not  prosper  except  in  localities 
in  which  real  estate  was  rapidly  advancing,  and  the 
borrower  obtained  an  advantage  from  the  advanced 
value  of  the  real  estate  he  was  paying  for. 

As  we  have  before  stated  in  the  last  chapter,  the 
net  plan  relieved  somewhat  the  rank  inequality  of 
this  system.  While  excessive  interest  was  not  re- 
quired, the  large  premiums  still  remained.  This  in 
turn  yielded  to  the  installment  plan.  In  this  the  bor- 
rower obtained  and  paid  interest  on  $200,  but  with 
each  monthly  payment  was  an  installment  of  premium. 
Under  either  plan,  whatever  premium  he  did  pay,  not 
over  one  fourth  came  back  to  him.  The  free  share- 
holders obtained  the  lion's  share. 

We  have  before  spoken  of  a  modification  of  these 
schemes  that  placed  the  interest  paid  from  month  to 
month  at  less  than  legal  interest.  This  system  proves 
but  a  delusion  and  a  snare  to  the  borrower.  In  addi- 
tion to  the  fact,  which  was  always  fallacious,  that  he 


THE  BEST  SCHEME.  109 

would  get  his  premium  back  in  dividends  upon  his 
shares,  he  was  shown  that  he  was  obtaining  a  low  rate 
of  interest,  and  that  he  could  afford  to  bid  a  high 
premium.  Under  these  conditions,  and  the  stimulus 
of  an  open  competitive  bidding,  the  premium  would  be 
run  up  until  the  borrower  paid  an  excessive  sum  in 
premium  and  interest  for  his  loan.  Such  are  the  dan- 
gers attendant  upon  this  scheme. 

The  fourth  plan,  the  premium  interest  plan,  is 
free  from  this  evil  where  the  minimum  rate  of  in- 
terest is  placed  at  the  legal  rate.  The  only  objection 
we  urge  to  this  scheme  is  the  want  of  simplicity  that 
we  have  before  discussed,  and  the  further  fact  that  it 
is  liable  to  breed  dissatisfaction  to  have  borrowers  year 
after  year  paying  different  rates  of  interest  on  the 
same  sum  of  money. 

But  whenever  in  this  scheme  the  minimum  rate  of 
interest  is  placed  below  the  legal  rate,  -there  still  re- 
main the  conditions  before  stated  which  prove  a  delu- 
sion and  often  a  snare  to  the  borrower,  and  it  is  also 
open  to  the  objection  of  being  wanting  in  simplicity. 
It  has  some  advantages  that  are  urged  in  its  favor  that 
should  be  noticed.  The  advocates  claim  for  it  the 
advantage  ol  adapting  itself  to  the  fluctuation  in  the 
money  market.  When  money  is  plenty,  the  borrower 
may  obtain  his  loan  below  legal  interest.  When  money 
is  scarce,  he  will  have  to  pay  more,  and  that  it  is 
equitable  that  he  should  do  so.  There  is  some  force 
in  this  claim ;  but  in  some  of  its  bearings  it  is  falla- 
cious. If  the  borrower  only  continued  to  pay  the 
higher  interest  while  the  increased  demand  for  money 
continued,  or  the  low  rate  while  the  demand  was 
small,  then  the  claim  would  have  greater  force ;  but 


HO  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

he  continues  to  pay  the  high  or  low  rate  of  interest 
so  long  as  he  continues  his  loan.  If  he  has  obtained 
a  low  rate,  he  will  not  change  it.  If  he  has  been 
compelled  to  pay  a  high  rate  to  obtain  the  loan,  he 
will  be  watching  for  an  opportunity  to  pay  off  the 
loan  and  obtain  a  new  one  at  a  lower  rate.  But  when 
the  scheme  requires  a  uniform  rate  of  interest  and  the 
premium  bid  is  understood  to  be  a  bonus  to  be  paid  at 
the  time,  the  amount  of  that  bonus  will  be  controlled 
by  the  condition  of  the  money  market.  If  money  is 
plenty,  he  will  not  pay  a  high  bonus ;  he  will  usually 
get  it  without  the  payment  of  any;  but  if  the  de- 
mand for  money  is  greater  than  the  supply,  he  will 
have  to  pay  a  bonus  accordingly.  The  increased  or 
decreased  premium,  upon  this  scheme,  therefore  more 
accurately  and  equitably  adjusts  itself  to  the  money 
market  than  the  high  or  low  rate  of  interest  in  the 
interest  premium  plan. 

Loans  in  small  sums,  to  be  repaid  in  driblets,  as 
loans  are  made  in  these  associations,  can  not  as  a  rule 
be  made  elsewhere.  The  rate  of  interest  upon  loans 
of  this  character  are  not  subject  to  much  fluctuation 
from  the  legal  rate.  The  borrower  will  always  be 
willing  to  pay  legal  interest  when  coupled  with  the 
other  advantages  offered  him. 

We,  therefore,  prefer  the  plan  of  the  co-operative 
savings  and  loan  associations  of  New  York.  Pre- 
mium should  not  enter  into  any  scheme  for  the  sake 
of  profits,  but  simply  as  a  mode  of  deciding  who  shall 
have  the  money.  It  should  be  understood  to  be  a 
bonus,  and  when  bid,  that  not  more  than  one  fourth 
is  coming  back  to  the  borrower.  When  money  is 
plenty,  no  bonus  will  be  bid. 


THE   BEST  SCHEME. 

Before  me  lies  the  reports  of  the  association  at  El- 
mira,  New  York,  before  mentioned,  for  the  years  of 
1886  and  1887.  It  loaned  for  the  fiscal  year  ending 
in  February,  1886,  $40,750;  rate  of  interest  6  per 
cent,  and  the  total  premiums  paid,  $62. 

For  the  fiscal  year  ending  in  February,  1887,  it 
loaned  $53,400,  and  the  total  premium  was  $232.45 ; 
and  the  report  of  both  years  states  that  the  demand 
for  loans  during  the  year  exceeded  the  amount  of 
money  the  association  had  to  loan. 

It  may  be  urged  that  this  system  admits  of  high 
bidding  by  the  borrower,  and  excessive  interest  result- 
ing therefrom.  That  is  true ;  so  does  any  system  yet 
devised ;  but  it  holds  out  no  false  or  delusive  incen- 
tives to  rash  bidding.  The  borrower  understands  he 
is  bidding  a  bonus ;  and  understanding  this,  he  will 
not  bid  high — and  in  the  practical  workings  it  will 
be  very  seldom  that  any  premium  will  be  bid  at  all. 

We  have  not  discussed  in  this  chapter  the  merits 
of  the  terminating  plan,  as  compared  with  the  perma- 
nent plans  for  issuing  stock,  for  the  reason  that  we 
assume  it  will  be  conceded  by  all  that  either  of  the 
permanent  plans  are  superior  to  the  terminating  plan. 

"We  prefer  the  serial  plan  to  the  plan  of  issuing 
stock  at  any  time.  The  only  object  of  issuing  at  any 
time  is  to  allow  persons  to  become  shareholders  with- 
out paying  back  dues.  This  is  sufficiently  obviated  in 
the  issuing  of  a  series  once  in  six  months.  Under 
this  plan,  any  stockholder  ascertaining  the  number  of 
shares  outstanding  in  each  of  the  series  can  determine 
very  closely  at  any  time  the  amount  of  the  accumu- 
lated capital  of  the  association.  We  prefer  it  for  its 
simplicity ;  and  it  is  the  plan  generally  adopted  wher- 


112  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

ever  these  associations  have  been  carefully  regulated 
by  the  laws  of  the  State. 

Voting  by  the  Stockholders. 

There  are  two  modes  of  voting.  The  first  is  to 
allow  the  stockholder  to  cast  one  vote  and  only  one, 
whether  he  holds  one  or  twenty  shares  of  stock.  The 
second  is  to  allow  him  to  cast  one  vote  for  each  share 
of  stock  held  by  him.  The  advocates  of  the  one-vote 
system  claim  that  it  prevents  a  few  stockholders  hold- 
ing large  blocks  of  stock  from  combining  to  control 
the  association.  This  is  true ;  but,  on  the  other  hand, 
it  allows  ten  men  holding  one  share  apiece  to  have  the 
same  voting  power  of  ten  men  holding  ten  shares 
apiece.  The  limitation  of  ten  free  shares  in  any  one 
series  is  a  sufficient  check  upon  the  attempt  of  a  few 
to  control  its  policy.  We  believe  each  stockholder 
should  be  allowed  to  cast  a  vote  equal  to  his  interest 
in  the  association,  to  the  extent  of  casting  one  vote  for 
each  share  of  stock  held  by  him.  If  no  limitation 
were  placed  upon  the  number  of  shares  a  stockholder 
might  hold,  we  would  agree  with  the  one- vote  plan ; 
but  we  prefer  to  place  the  limitation  in  the  holding  of 
shares,  and  then  each  share  have  a  vote. 

In  conclusion,  then,  we  express  our  preference  for 
the  scheme  which  issues  its  stock  in  series,  matured 
value  $200,  monthly  dues  of  one  dollar,  money  loaned 
without  a  premium  when  there  is  no  competition  and 
when  competition  occurs,  the  premium  bid  being 
treated  as  a  bonus  and  deducted  from  the  loan ;  inter- 
est at  6  per  cent,  payable  monthly.  Hence  we  ap- 
prove, in  the  main,  the  scheme  of  the  co-operative 
savings  and  loan  associations  of  New  York. 


CHAPTER  VII. 

HOW  TO  ORGANIZE  A  CO-OPEEATIVE  SAVINGS  AND 
LOAN  ASSOCIATION  UNDER  THE  NEW  YORK  ACT 
OF  1887. 

IT  is  our  purpose  to  explain,  first,  in  detail,  how  to 
organize  a  co-operative  savings  and  loan  association 
under  the  general  act  for  their  incorporation,  passed 
by  the  Legislature  of  the  State  of  New  York  in  1887. 
The  act  itself  will  be  found  in  the  Appendix. 

The  first  section  of  this  act  provides :  "  That  any 
fifteen  or  more  persons,  being  of  full  age,  may  form 
an  association  as  provided  within  this  act.  All  asso- 
ciations formed  under  the  provisions  hereof  shall  be 
known  as  co-operative  savings  and  loan  associations, 
and  the  name  of  every  association  so  formed  shall  con- 
tain, as  a  part  thereof,  the  words,  '  co-operative  sav- 
ings and  loan  association.' " 

The  first  step  therefore  is  to  find  fifteen  or  more 
persons  of  full  age  who  will  unite  to  form  an  associa- 
tion. The  only  condition  which  the  statute  provides 
for  membership  is  one  of  age. 

Any  person  desirous  of  forming  a  loan  association 
in  his  own  locality  should  prepare  a  paper  in  language 
substantially  as  follows : 


114  CO-OPERATIVE  SAYINGS  AND  LOAN  ASSOCIATIONS. 

"  The  undersigned,  being  of  full  age,  hereby  ex- 
press a  desire  to  unite  in  the  formation  of  a  co-opera- 
tive savings  and  loan  association  under  the  provisions 
of  the  act  for  their  incorporation  known  as  Chapter 
556  of  the  laws  of  1887  of  the  State  of  New  York, 
and  upon  the  due  incorporation  of  said  association 
and  the  adoption  of  by-laws,  we  hereby  severally  agree 
to  take  the  number  of  shares  of  stock  in  said  associa- 
tion set  opposite  our  respective  names." 

Below  the  written  matter  the  paper  should  be  ruled 
and  headed  as  follows  : 


NAME. 

RESIDENCE. 

No.  OF  SHARES. 

The  paper  being  thus  prepared,  it  is  ready  for  sign- 
ing by  those  who  will  join  in  the  formation  of  the 
association. 

While  only  fifteen  are  necessary  for  the  formation 
of  an  association,  it  is  well  to  obtain  as  many  more  as 
possible.  The  greater  the  number  who  will  join  in 
the  organization  the  greater  will  be  the  interest  in  the 
enterprise  in  the  community,  and  a  larger  issue  of 
stock  will  be  secured  at  the  first  meeting  for  issuing 
the  same. 

The  question  will  arise  as  to  how  large  a  commu- 
nity should  be  to  undertake  to  conduct  an  association 
successfully.  Any  business  center  having  a  popula- 
tion of  five  hundred  can  maintain  one  of  these  associa- 
tions ;  and  it  will  be  especially  adapted  to  the  wants 
of  the  community  if  a  large  element  of  the  popula- 
tion belongs  to  the  wage-earning  classes. 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  188Y.    115 

The  requisite  number  having  been  obtained  to  join 
in  the  formation  of  an  association,  the  next  step  is  in- 
corporation. 

Section  3  of  the  statute  provides  that  "  said  as- 
sociation shall  become  incorporated  by  the  said  fifteen 
or  more  persons  making,  signing,  and  acknowledging, 
in  the  manner  and  form  prescribed  for  the  acknowl- 
edgement of  deeds  in  this  State,  a  certificate  wherein 
shall  be  stated  the  name  of  said  association ;  that  the 
association  is  formed  under  and  for  the  purposes  pre- 
scribed in  this  act ;  the  town,  village,  or  city  where 
the  association  is  located  within  this  State ;  and  the 
limit  of  the  number  of  shares  of  stock  it  shall  have 
outstanding  at  any  one  time. 

"  When  made  as  aforesaid,  said  certificate  shall  be 
filed  and  recorded  in  the  office  of  the  Secretary  of 
State,  and  upon  said  certificate  being  so  filed  and  re- 
corded the  Secretary  of  State  shall  issue  a  certificate 
in  proper  and  suitable  form,  declaring  the  facts  con- 
tained in  said  original  certificate,  and  the  filing  and 
recording  thereof  in  his  office,  and  which  latter  cer- 
tificate shall  thereupon  be  recorded  in  the  county 
clerk's  office  of  the  county  where  said  association  is 
located ;  and,  upon  the  same  being  so  recorded,  the 
persons  named  in  the  certificate  first  above  mentioned, 
their  associates  and  successors,  shall  become  a  corpo- 
rate body." 

The  procedure  for  incorporation  is  thus  clearly 
pointed  out  in  this  section  of  the  statute. 

The  drafting  of  the  certificate  is  the  first  thing  to 
be  done.  The  law  enumerates  the  facts  which  it  must 
contain.  1.  The  name  of  the  association.  If  no 
common  understanding  has  come  to  pass  as  to  what 


116  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

the  name  shall  be,  this  can  be  left  blank,  except  the 
part  which  the  law  prescribes  must  appear  in  the  name 
of  every  association,  viz. :  "  co-operative  savings  and 
loan  association."  The  completion  of  the  name  need 
not  be  determined  until  a  meeting  is  called  for  that 
purpose,  and  to  execute  the  certificate.  In  deciding 
upon  a  name  it  is  well  to  identify  the  locality  of  the 
association  by  the  name  adopted,  as  "  The  Albany  Co- 
operative Savings  and  Loan  Association  " ;  or,  if  the 
association  is  organized  by  a  special  class,  as  "  The  Al- 
bany Kailway  Co-operative  Savings  and  Loan  Associa- 
tion," or  "The  Albany  Clerks'  Co-operative  Savings 
and  Loan  Association,"  etc. 

2.  The  statement  that  the  association  is  formed 
under  and  for  the  purposes  prescribed  in  Chapter  556 
of  the  laws  of  New  York  for  1887,  entitled  an  act 
"  providing  for  the  formation  of  co-operative  savings 
and  loan  associations  " ;  and  in  the  event  such  act  has 
been  amended  at  the  time  of  the  making  of  the  cer- 
tificate, there  should  be  added,  "  and  the  acts  amenda- 
tory thereof." 

3.  The  name  of  the  town,  village,  or  city  where  the 
association  is  located. 

4.  The  limit  of  the  number  of  shares  of  stock  the 
association  shall  have  outstanding  at  any  time. 

Section  5  of  the  act  provides,  "  that  the  total  num- 
ber of  shares  outstanding  at  any  time  shall  not  exceed 
ten  thousand."  This  fixes  the  maximum  limit. 

We  perceive  no  advantage  to  be  gained  by  fixing 
the  limit  at  a  less  number,  except  it  arise  out  of  the 
laws  relating  to  taxation.  As  the  laws  stand  at  this 
writing  in  the  State  of  New  York,  no  advantage  is 
gained  in  that  direction.  These  associations  are  "  in- 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.   H7 

stitutions  for  savings,"  and  therefore  not  liable  under 
the  general  corporation  tax  act,  and  are  especially  ex- 
empted from  the  provisions  of  Chapter  143  of  the  laws 
of  1886,  which  is  an  act  taxing  the  privilege  of  organ- 
izing a  corporation. 

However,  outside  of  cities,  it  will  rarely  occur  that 
an  association  will  wish  to  have  more  than  five  thou- 
sand shares  outstanding  at  one  time,  and  in  small  vil- 
lages they  will  seldom  exceed  three  thousand  shares. 
We  suggest  the  following  as  a  form  for  the  certificate 
of  incorporation : 

This   memorandum  certificate   of    incorporation, 

made  this day  of  ,  18 . . ,  certifies  that  we, 

[here  insert  names],  being  of  full  age,  have  agreed  to 
unite,  and  do  hereby  unite,  to  form  a  co-operative 
savings  and  loan  association,  as  follows,  to  wit : 

1.  Said  association  is  formed  under  the  provisions 
and  for  the  purposes  prescribed  in  Chapter  556  of  the 
laws  of  1887  of  the  State  of  New  York,  and  any  acts 
amendatory  thereof. 

2.  The  name  of  the  association  is  The  [insert  name] 
Co-operative  Savings  and  Loan  Association. 

3.  The  said  association  is  formed  to  conduct  the 
business  thereof  in  the   [town,   village,   or  city]  of 
[name],  in  the  State  of  New  York. 

4.  The  number  of  shares  of  stock  which  said  asso- 
ciation shall  have  outstanding  at  any  one  time  shall 
not  exceed  the  number  of 

We  ask  that  the  Secretary  of  State  of  the  State  of 
New  York  shall  file  and  record  this  certificate  in  pur- 
suance of  the  provisions  of  section  3  of  said  Chapter 
556  of  the  laws  of  1887. 


118  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

In  witness  whereof,  we  have  hereunto  set  our  hands 
and  seals  the  day  and  year  first  above  written. 

(seal)         (seal) 

(seal)         (seal) 

(seal)         (seal) 

(seal)         (seal) 

(seal)         (seal) 

(seal)         (seal) 

(seal)         (seal) 

(seal)         (seal) 

etc.  etc. 

State  of  New  York,  \ 

County  of ) 

On  this  ....  day  of : .,  18. .,  personally  ap- 
peared before  me  the  undersigned,  a  notary  public  in 
and  for  said  county  [insert  names  of  all  who  signed 
above],  to  me  personally  known  to  be  the  same  persons 
who  signed  the  foregoing  certificate  of  incorporation 
and  severally  duly  acknowledged  that  they  executed 
the  same. 


ss. 


Notary  Public. 

Execution  of  the  Certificate. 

A  meeting  of  those  who  have  agreed  to  unite  in 
the  organization  should  be  called  at  some  convenient 
hour  and  place,  at  which  time  the  name  of  the  associa- 
tion should  be  decided  upon,  if  it  has  not  been  before, 
and,  upon  the  same  being  inserted  in  the  certificate, 
all  should  sign  their  full  names,  and  a  seal  should  be 
affixed  opposite  each  name.  A  notary  public  should 
be  in  attendance  and  take  the  acknowledgments  of  the 
signers  as  to  a  deed. 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.   H9 

While  together,  the  members  should  designate  some 
three  of  their  number  as  a  committee  to  call  the  next 
meeting  of  the  incorporators,  which  will  occur  after 
the  incorporation  has  been  completed,  and  such  com- 
mittee should  also  be  directed  to  prepare  by-laws  for 
the  consideration  of  the  incorporators. 

The  certificate  should  be  next  taken  to  the  county 
clerk  for  his  certificate,  to  be  annexed  as  to  the  official 
acts  of  the  notary  who  has  taken  the  acknowledgment. 
The  paper  is  then  ready  to  be  forwarded  to  the  Secre- 
tary of  State,  to  be  filed  and  recorded. 

With  it  should  be  sent  the  amount  the  Secretary  of 
State  is  entitled  to  for  filing  and  recording  it  and  is- 
suing the  certificate,  which  said  third  section  provides 
he  shall  issue,  to  be  recorded  in  the  county  clerk's 
office. 

Unless  the  Secretary  of  State  shall  prescribe  a  dif- 
ferent form  for  use  by  him,  we  suggest  the  following 
as  a  form  for  such  certificate,  and  that  it  be  sent  with 
the  original  certificate  to  the  Secretary  of  State,  so 
that  all  he  will  have  to  do  is  to  execute  and  return  the 
same.  We  hope  these  associations  will  become  so  gen- 
eral that  the  Secretary  of  State  will  prepare  and  have 
printed  a  certificate  that  shall  to  some  extent  be  artist- 
ic, as  it  will  constitute  the  charter  of  the  association 
when  the  memoranda  of  the  county  clerk  showing 
that  it  has  been  recorded  in  his  office  has  been  in- 
dorsed upon  it. 

FORM   OF   CERTIFICATE    ISSUED   BY   SECRETARY   OF   STATE. 

To  all  whom  it  may  concern  : 

This  instrument  duly  certifies  that  [insert  names 
of  those  who  executed  certificate  filed  and  recorded  in 


120   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

his  office],  have  duly  filed  in  this  office,  and  the  same 
has  been  duly  recorded,  a  certificate  for  the  purpose  of 
incorporation,  under  the  provisions  and  for  the  pur- 
poses prescribed  in  Chapter  556  of  the  laws  of  1887, 
and  any  acts  amendatory  thereof,  providing  for  the 
formation  of  co-operative  savings  and  loan  associations. 

That  the  certificate  so  filed  and  recorded  duly  sets 
forth  that  the  name  of  such  association  is  "  The 
Co-operative  Savings  and  Loan  Association." 

That  such  association  is  formed  under  the  provis- 
ions and  for  the  purposes  prescribed  in  Chapter  556 
of  the  laws  of  1887,  and  any  acts  amendatory  thereof. 

That  such  association  is  located  in  the of 

,  in  the  County  of ,  in  the  State  of  New 

York. 

That  the  capital  stock  of  said  association  outstand- 
ing at  any  time  shall  not  exceed  thousand 

shares,  and  upon  the  recording  hereof  in  the  county 

clerk's  office  of  the  county  of in  this  State,  the 

incorporation  of  said  association  will  be  complete. 

In  witness  whereof,  I  have  hereunto  set  my 
hand  and  affixed  my  official  seal  at  the  city  of 
Albany,  in  the  State  of  New  York,  on  this 

day  of ,  in  the  year  of  our  Lord 

one  thousand  eight  hundred  and  eighty- 


Secretary  of  State. 

Upon  the  receipt  of  this  certificate  from  the  Secre- 
tary of  State,  it  should  be  forthwith  recorded  in  the 
county  clerk's  office  of  the  county  mentioned  in  the 
certificate ;  and  upon  being  so  recorded,  the  incorpo- 
ration of  the  association  will  be  complete. 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.    121 


By-Laws. 

The  next  step  in  completing  the  organization  is 
the  framing  and  adoption  of  by-laws. 

Section  17  of  the  statute  provides  that :  "  The  asso- 
ciation as  soon  as  duly  incorporated  shall  possess 
power  to  adopt  by-laws,  not  inconsistent  with  the  pro- 
visions of  this  act,  regulating  the  due  conduct  of  the 
business  of  the  association,  defining  the  duties  of  the 
officers  and  committees,  times  of  meetings,  mode  of 
determining  and  declaring  the  withdrawing  value  of 
shares,  and  in  relation  to  all  other  matters  having  ref- 
erence to  the  conduct  of  the  business,  although  not 
specifically  mentioned  in  this  act." 

In  the  case  of  building  and  loan  associations  in 
this  State,  formed  under  the  provisions  of  Chapter  122 
of  the  laws  of  1851,  it  is  necessary  to  have  what  was 
termed,  "  articles  of  association."  In  familiar  speech 
these  are  called  the  "  constitution  "  of  the  association, 
and  are  filed  in  the  office  of  the  county  clerk,  as  a  part 
of  the  steps  to  become  incorporated. 

Under  the  act  of  1887  this  is  not  required.  The 
act  itself  constitutes  the  constitution. 

The  reason  of  this  is  clear  when  we  consider  that 
the  provisions  of  the  act  of  1851  admitted  of  great 
variety  in  the  schemes  upon  which  associations  could 
be  conducted,  and  the  particular  plan  or  scheme  of  the 
association  was  outlined  in  the  articles  of  association ; 
while  under  the  act  of  1887,  but  one  general  scheme 
is  allowed,  and  that  is  definitely  outlined  in  the  act 
itself. 

But  the  act  of  1887  allows  of  minor  variations  in 

the  details  of  the  scheme,  and  these  are  to  be  described 
9 


122   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

in  the  by-laws.     There  will  be  found  in  the  Appendix 
a  complete  set  of  by-laws  as  a  form. 

We  shall  here  discuss  only  such  portions  of  them  as 
seem  necessary  to  give  those  seeking  to  organize  an  asso- 
ciation a  clear  understanding  of  what  the  by-laws  should 
contain,  the  reasons  therefor,  and  the  duties  of  officers 
thereunder. 

Officers. 

Section  4  of  the  act  provides  that :  "  The  officers 
of  the  association  shall  consist  of  a  president,  vice- 
president,  treasurer,  and  secretary,  who  shall  be  ex- 
officio  members  of  the  board  of  directors,  which  shall 
consist  of  nine  members,  exclusive  of  said  ex-officio 
members.  Other  officers  may  be  authorized  by  the  by- 
laws. 

"  The  duties  and  compensation  of  the  officers,  their 
terms  of  office,  the  time  of  their  election,  and  the  time 
of  periodical  meetings  of  the  officers  and  shareholders, 
shall  be  determined  by  the  by-laws,  except  that  the 
board  of  directors  shall  determine  each  year  the  com- 
pensation of  the  secretary  and  treasurer." 

Term  of  Office. 

Under  the  terms  of  this  section,  the  by-laws  will 
determine  the  length  of  time  for  which  officers  may  be 
chosen.  We  think  no  question  will  arise  as  to  the  term 
of  office  of  the  president,  vice-president,  treasurer, 
and  secretary.  The  term  of  one  year  is  so  universal 
that  no  one  would  suggest  otherwise.  The  term  should 
be  for  one  year.  It  is  easy  to  re-elect  a  good  officer, 
and  it  is  the  easiest  mode  to  get  rid  of  an  inefficient 
one  by  electing  some  one  else. 

As  to  the  nine  members  of  the  board  of  directors, 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.    123 

there  may  arise  a  difference  of  opinion.  It  may  be 
claimed  that  it  would  be  unwise  to  elect  a  full  board 
each  year ;  that  it  would  admit  of  bringing  in  an  en- 
tirely new  body  of  men,  who  would  not  have  the  ex- 
perience that  those  who  had  served  upon  the  board 
would  have,  and  that  it  would  be  better  to  elect  for 
three  years,  thereby  making  it  possible  to  bring  in 
only  three  new  men  each  year.  On  the  other  hand, 
that  mode  allows  of  the  possibility  of  a  ring  being 
formed  in  the  board;  or,  if  an  inefficient  member 
has  been  elected,  he  can  not  well  be  got  rid  of  under 
three  years.  We  believe  the  best  method  is  to  elect  all 
annually ;  you  can  re-elect  the  good  members  and  drop 
those  who  have  not  been  satisfactory,  either  in  their 
conduct  of  business  or  in  inattention  to  their  duties. 
There  can  not  be  a  change  unless  the  owners  of  a  ma- 
jority of  the  shares  outstanding  desire  it,  and  that  is 
not  likely  to  occur  unless  there  is  good  ground  for  the 
change.  The  usual  course  is  to  continue  from  year  to 
year  the  board  of  directors  with  few  changes.  This 
has  been  the  practice  in  building  and  loan  associa- 
tions generally.  We  therefore  recommend  that  the 
by-laws  prescribe  for  the  annual  election  of  all  officers, 
and  that  all  officers  shall  hold  office  until  removed  or 
their  successors  qualify. 

Should  it  be  determined  to  adopt  a  three  years' 
term  of  office  for  directors,  then  the  by-laws  should 
provide  for  a  casting  of  lots  among  the  nine  directors 
elected  at  the  organization,  in  order  to  determine  who 
should  hold  office  for  the  term  of  one  year,  who  for 
two  years,  and  who  for  three  years ;  and  provide  that 
at  each  annual  election  thereafter  there  shall  be  three 
directors  elected  for  the  term  of  three  years. 


124  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

The  by-laws  should  also  prescribe  in  what  manner 
a  vacancy  occurring  in  the  board  of  directors  or  oth- 
er officers  shall  be  filled,  until  the  next  annual  elec- 
tion. This  may  be  done  by  a  special  meeting  of  the 
shareholders  held  for  such  purpose,  or  by  the  board  of 
directors.  "We  recommend  the  latter  course  as  being 
the  simplest,  and  not  involving  the  expense  attending 
the  calling  of  a  meeting.  It  is  unnecessary  to  discuss 
here  the  ordinary  duties  of  the  several  officers.  These 
will  be  expressed  in  general  terms  in  the  by-laws.  The 
form  which  we  give  contains  such  provisions  as  we 
deem  proper.  (See  Appendix.) 

Treasurer. 

The  treasurer  must  give  bonds  in  such  sum  as  the 
board  of  directors  prescribe.  These  bonds  should  be 
twice  the  amount  of  any  sum  of  money  which  it  is 
anticipated  will  be  in  his  hands  at  any  one  time  dur- 
ing the  year.  We  recommend  at  least  two  sureties, 
and  one  at  least  should  not  be  connected  with  the  bank 
where  the  treasurer  deposits  his  money.  The  reason 
of  this  last  provision  is,  that  in  case  the  bank  fails 
both  sureties  will  not  be  involved. 

The  president  and  secretary  should  sign  the  certifi- 
cates of  stock  and  all  orders  for  money  drawn  upon 
the  treasurer.  They  should  have  no  authority  to  issue 
an  order  upon  the  treasurer,  except  in  pursuance  of  an 
order  of  the  board  of  directors,  except  in  the  case  of 
loans ;  and  as  to  these  orders,  the  by-laws  should  pro- 
vide that  an  order  should  not  be  issued  until  the 
securities  have  been  approved  by  the  committee  and 
attorney  who  have  to  pass  upon  their  sufficiency;  and, 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.   125 

in  case  of  real-estate  security,  the  mortgage  has  been 
left  with  the  county  clerk  for  record. 

The  by-laws  should  provide  that  every  order  drawn 
should  be  dated  when  drawn,  and  specify  the  purpose 
for  which  made  and  the  name  of  the  payee. 

The  Secretary. 

It  is  unnecessary  to  discuss  here  the  duties  of  the 
secretary  in  keeping  the  books  of  account  or  what 
books  he  should  keep.  We  refer  the  reader  to  the 
ninth  chapter,  where  the  matter  is  fully  treated. 

At  each  stated  monthly  meeting  of  the  board  it  is 
desirable  to  have  a  report  from  the  secretary  showing 
the  number  of  shares  outstanding,  the  number  bor- 
rowed upon,  the  receipts  of  the  last  meeting,  and  the 
balance  of  cash  on  hand.  A  form  for  this  report  may 
be  made  which  can  be  used  through  the  fiscal  year. 
Any  member  of  the  board  desiring  to  keep  fully  in- 
formed on  the  details  from  month  to  month,  can  do  so 
by  having  one  of  the  forms  for  this  report,  and  making 
himself,  or  have  the  secretary  make  for  him,  the  en- 
tries from  month  to  month.  Many  other  items  of  in- 
formation may  be  embodied  in  this  monthly  report. 
It  need  not  be  entered  in  the  minutes.  Its  object  is  to 
give  the  members  of  the  board  full  information  from 
month  to  month,  and  in  such  form  thatv  with  experi- 
ence, they  will  be  enabled  to  so  keep  track  of  the  de- 
tails of  the  association  that  they  can  detect  at  once  any 
departure  by  the  secretary,  or  treasurer,  or  president 
from  strict  adherence  to  the  by-laws.  For  a  form  for 
such  monthly  report  see  Appendix. 

The  annual  report  of  the  secretary  should  be  a  full 
and  complete  report  of  the  transactions  of  the  year, 


126   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS, 

showing  the  total  receipts  in  detail,  so  that  the  amount 
received  from  each  source  of  income  will  clearly  ap- 
pear, as  well  as  the  total  disbursements,  and  the  pur- 
poses for  which  they  were  made.  This  report  should 
be  printed,  and  distributed  to  stockholders  before  or  at 
the  beginning  of  the  annual  meeting.  For  a  form  for 
such  report  see  Appendix. 

Accompanying  the  report,  the  president  may  make 
any  review  of  the  business  of  the  year,  and  any  sugges- 
tions or  recommendations  which  seem  to  him  wise. 
In  this  connection  it  is  proper  to  refer  to  the  manifest 
importance  of  having  a  good  secretary.  He  should  be 
a  fair  accountant  at  least,  and  thoroughly  post  himself 
at  the  outset  of  his  work.  It  is  simple  work  to  keep 
the  accounts  if  a  proper  system  is  adopted ;  but  if  an 
inadequate  system  is  adopted  in  the  beginning  it  will 
complicate  and  lead  to  tangles  in  after  years  that  will 
prove  very  annoying,  involving  much  labor  and  vexa- 
tion. He  should  comprehend  fully  the  scheme  upon 
which  the  association  is  based,  and  be  able  to  explain 
it  to  others ;  he  should  at  all  times  be  affable,  and 
cheerfully  explain,  to  all  who  ask  him,  questions  about 
the  workings  of  the  association.  The  details  of  the 
work  done  are  largely  under  his  care.  There  must  be 
absolute  accuracy  in  all  his  entries,  and  promptness  in 
doing  his  work.  Under  the  law,  only  he  and  the  treas- 
urer can  receive  compensation  for  their  services,  and 
usually  the  pay  of  the  treasurer  is  nominal.  The  sec- 
retary should  receive  a  sum  that  pays  him  fairly  for 
the  work  done. 

In  many  places  where  the  old  building  and  loan 
associations  have  flourished,  and  are  now  flourishing, 
one  man  will  be  secretary  of  two  or  more  associations ; 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.   127 

and  under  such  arrangement  he  is  able  to  devote  his 
entire  time  to  their  work.  The  same  thing  occurs 
under  the  co-operative  bank  scheme  of  Massachusetts ; 
and  there  is  no  objection,  in  cities  that  can  maintain 
several  associations,  to  the  same  thing  being  done  un- 
der the  recent  law  of  New  York,  or  wherever  that 
scheme  may  be  adopted. 

Finance  Committee. 

The  nine  members  of  the  board  of  directors  should 
be  divided  into  three  finance  committees,  each  commit- 
tee serving  for  the  term  of  four  months.  This  com- 
mittee will  have  charge  of  the  receipts  of  dues,  inter- 
est, and  fines,  and  must  pass  upon  the  sufficiency  of 
securities  offered  for  loans.  Its  duties  are  important. 
In  the  matter  of  receiving  dues,  etc.,  the  by-laws  should 
give  it  the  right  to  call  upon  the  secretary  and  treas- 
urer to  aid  them.  In  passing  upon  securities,  it  will 
receive  the  assistance  of  the  attorney;  the  duties  of 
the  latter,  however,  being  confined  to  the  examination 
of  abstracts  of  title  furnished  by  the  borrowers  from 
the  county  clerk,  the  drawing  of  the  bonds  and  mort- 
gages, and,  when  the  loan  is  finally  passed,  seeing  that 
the  mortgages  are  at  once  recorded  in  the  proper 
clerk's  office. 

The  detail  of  passing  upon  securities  is  as  follows : 
At  the  time  the  borrower  bids  off  his  loan,  he  should 
describe  upon  suitable  blanks,  furnished  by  the  asso- 
ciation, the  real  estate  offered  as  a  security,  or,  in  case 
of  a  "  stock  loan,"  the  shares  of  stock  of  the  asso- 
ciation. The  loans  proposed  to  be  secured  by  stock 
can  be  disposed  of  by  the  whole  board  at  once  if  de- 
sired. The  secretary  would  be  able  to  inform  the 


128   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

board  whether  the  borrower  owned  the  stock  which  he 
proposed  as  a  security,  and  the  withdrawal  value  of 
the  same  ;  but  if  no  one  asked  for  an  immediate  con- 
sideration of  a  stock  loan,  the  descriptions  of  proposed 
securities  would  be  handed  to  the  finance  committee. 
The  by-laws  should  prescribe  the  time  when  the  com- 
mittee shall  meet,  following  each  stated  meeting,  to 
pass  upon  securities.  Before  the  time  of  such  meeting 
arrives,  each  member  of  the  committee  should  examine 
with  care  the  real  estate  proposed,  and  appraise  its  fair 
market  value.  In  making  this  appraisal  there  should 
be  exercised  great  caution  and  intelligent  judgment. 
The  following  conditions  should  be  carefully  ascer- 
tained and  noted  :  Is  the  tendency  of  value  of  real 
estate  where  the  property  is  situated  upward  or  down- 
ward ?  Is  its  present  value  speculative  or  substantial  ? 
Is  it  the  result  of  a  "  boom,"  or  of  an  undue  depres- 
sion ?  Is  its  particular  location  one  where  property  is 
liable  to  advance  or  decline  in  value  ?  Is  it  vacant,  or 
built  upon  ?  If  built  upon,  what  is  the  character  of  the 
buildings  ?  Are  they  well  or  cheaply  constructed  ? 
And  what  is  their  rental  value,  and  the  class  of  ten- 
ants which  occupy  them  ?  If  not,  are  they  to  be  occu- 
pied by  the  borrower  as  a  home  ?  And,  lastly,  what 
are  the  antecedents  and  habits  of  the  borrower,  his 
ability,  and  prospects  of  securing  a  steady  income  to 
meet  his  dues  and  interest  ?  All  these  questions  enter 
into  the  examination  of  real  estate  offered  as  a  security, 
and  should  have  weight  in  accepting  or  rejecting  the 
proposed  security  for  a  loan.  Each  member  of  the 
committee  having  thus  examined  the  property  and 
made  his  appraisal  is  prepared  to  vote  intelligently 
when  assembled  to  pass  on  the  loan. 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.   129 

In  determining  whether  the  security  offered  for 
the  loan  is  sufficient,  the  question  arises,  What  per- 
centage of  value  shall  be  loaned  ?  Here  two  courses 
are  open  under  the  law  of  New  York.  A  maximum 
limit  may  be  fixed  by  the  by-laws,  as  seventy-five  per 
cent ;  or  it  may  be  left  wholly  to  the  discretion  of  the 
committee.  My  own  conviction,  arrived  at  after  much 
experience,  is  that  the  safest  way  is  to  leave  the  respon- 
sibility wholly  with  the  committee,  the  guiding  rule 
being  that  a  sufficient  margin  should  be  required  be- 
tween the  value  and  the  amount  loaned  to  make  the 
loan  safe  under  all  reasonable  probabilities.  There  is 
no  way  of  escaping  the  fact  that  the  association  must 
rely  upon  the  good  judgment  and  integrity  of  its  com- 
mittee. If  the  committee  is  corrupt  or  visionary  as  to 
the  value,  no  by-law  can  restrain  or-  guide  it.  To  evade 
the  by-laws,  when  the  percentage  to  be  loaned  is  fixed, 
it  is  only  necessary  to  appraise  the  value  sufficient  to 
bring  the  case  within  the  letter  of  the  by-law.  It  is 
better  to  place  the  responsibility  of  making  a  good 
loan  squarely  upon  the  committee,  without  any  fetters 
save  those  dictated  by  a  sound  judgment  and  a  cau- 
tious prudence.  If  the  committee  on  consultation  ap- 
prove the  security  offered,  then  the  attorney  takes 
charge  of  seeing  that  the  title  is  good,  and  of  the  prep- 
aration of  the  necessary  papers  to  perfect  the  loan.  The 
by-laws  may  allow  the  attorney  to  make  the  abstract 
of  title  or  require  the  borrower  to  produce  to  the  at- 
torney an  abstract  from  the  county  clerk  which  the 
attorney  shall  examine  and  pass  upon. 

We  prefer  the  latter  course,  under  the  laws  of  the 
State  of  New  York.  If  the  attorney  finds  the  title 
satisfactory,  he  will  prepare  the  bond  and  mortgage 


130  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

and  have  them  executed,  together  with  an  assignment 
of  the  shares  of  stock  borrowed  upon,  and  leave  the 
mortgage  at  the  clerk's  office  for  record.  If  any  in- 
surance is  required  by  the  terms  of  the  mortgage, 
this  should  be  procured,  whereupon  the  order  for  the 
loan  will  be  drawn  and  delivered  to  the  borrower.  All 
securities,  except  the  mortgage,  should  be  passed  by 
the  attorney  at  once  to  the  secretary,  who  will  obtain 
the  mortgage  from  the  clerk's  office  as  soon  as  re- 
corded, make  the  proper  entries  in  the  security  book, 
and  then  turn  over  the  same  to  the  treasurer  in  whose 
custody  they  will  remain.  The  charges  of  the  attor- 
ney for  his  services  must  be  paid  by  the  borrower. 
The  amount  may  be  left  to  his  discretion,  or  the  by- 
laws may  empower  the  board  of  directors  to  fix  a 
schedule  of  rates. 

Meetings. 

The  by-laws  should  fix  the  times  for  all  the  regu- 
lar meetings  of  the  shareholders  and  of  the  board  of 
directors.  The  first  annual  meeting  of  the  sharehold- 
ers will  naturally  occur  soon  after  the  last  stated 
monthly  meeting  in  the  fiscal  year,  for  the  receipt  of 
dues,  sufficient  time  being  allowed  after  the  monthly 
meeting  to  permit  the  officers  to  get  their  books  prop- 
erly balanced  up  and  the  annual  reports  prepared. 

In  fixing  the  time  of  the  monthly  meeting  for  the 
receipt  of  dues,  etc.,  the  question  presented  is,  at  what 
time  in  the  month  will  the  wage  earners  as  a  general 
rule  be  best  able  to  pay  their  dues  and  interest? 
"When  do  they  usually  receive  their  pay  ?  In  railroad 
centers  the  time  should  be  fixed  after  the  monthly 
pay-day.  Attention  at  the  beginning  to  this  question 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.    131 

will  often  enable  men  to  become  shareholders  who 
would  not  if  the  monthly  meeting  was  before  "  pay- 
day," and  will  prevent  the  trouble  of  amendments  of 
the  by-laws  to  meet  these  conditions  after  the  associa- 
tion has  been  formed  and  begun  operations.  The 
manner  of  calling  special  meetings  of  the  shareholders 
and  of  the  board  of  directors  will  be  provided  in  the 
by-laws. 

Withdrawals. 

Section  7  of  the  general  act  of  incorporation, 
among  other  things,  provides  that,  "  The  withdrawing 
shareholder  shall  be  paid  the  amount  of  the  withdraw- 
ing value  of  his  accumulations  as  determined  under 
the  by-laws  at  the  last  distribution  of  profits  before 
the  notice  of  withdrawal,  together  with  all  dues  paid 
since  such  distribution,  and  such  interest  on  the  value 
of  the  shares  at  the  time  of  the  last  distribution  and 
on  the  dues  thereafter  paid,  as  the  by-laws  shall  deter- 
mine." 

From  a  reading  of  the  section  it  will  appear  that  it 
makes  full  provisions  as  to  the  manner  of  giving  no- 
tice of  withdrawal,  and  when  the  amount  of  the  with- 
drawal shall  be  paid.  It  is  left  to  the  by-laws  to  deter- 
mine the  manner  in  which  the  withdrawal  value  shall 
be  determined.  The  questions  that  arise  for  consid- 
eration in  forming  the  by-laws  upon  this  subject  may 
be  stated  as  follows  : 

1.  Shall  the  withdrawing  shareholder  be  allowed 
all  the  profits  that  have  accumulated  upon  arM  been 
added  to  his  shares  in  the  form  of  dividends,  or,  only 
a  part  of  such  profits  ? 

2.  If  he  is  not  to  be  allowed  all  the  profits,  what 
part  shall  be  retained  ? 


132  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

3.  If  a  part  is  retained,  shall  it  be  a  uniform  per- 
centage, applying  to  all  withdrawals  regardless  of  the 
age  of  the  shares  when  withdrawn  ? 

4.  Shall  the  part  retained  by  the  association  be 
arranged  upon  a  plan  whereby,  as  the  share  advances 
toward  maturity,  a  smaller  percentage  shall  be  re- 
tained ? 

5.  If  the  latter  course  is  adopted,  shall  the  by-laws 
fix  the  amount  for  each  year  that  a  series  has  run? 

Or,  Lastly  :  Shall  the  whole  matter  be  devolved 
upon  the  board  of  directors,  for  them  to  determine 
the  withdrawal  value  in  each  series,  to  remain  in  full 
force  until  the  next  distribution  and  another  declara- 
tion of  withdrawing  values  ? 

If  the  withdrawing  shareholder  is  allowed  all  the 
profits  which  have  been  added  to  the  dues  paid  into 
the  association,  the  by-laws  would  simply  so  declare, 
and  fix  the  rate  of  interest  to  be  allowed  upon  the 
value  of  the  shares,  as  determined  at  the  last  distribu- 
tion and  upon  the  dues  paid  in  since  that  time. 

If  the  association  should  deem  it  wise  to  have  the 
association  retain  a  uniform  percentage  of  the  profits 
from  the  withdrawing  shareholder,  regardless  of  the 
age  when  withdrawn,  the  by-laws  would  name  the  per- 
centage to  be  retained,  and  determine  the  rate  of  in- 
terest to  be  allowed  as  above  since  the  last  distribution 
of  profits. 

If,  however,  it  is  deemed  best  to  adjust  the  rate  of 
percentage  retained  according  to  the  age  of  the  series 
when  the  share  is  withdrawn,  allowing  a  larger  share 
of  the  profits  as  the  share  advances  toward  maturity, 
and  at  the  same  time  it  is  thought  best  to  fix  the  rate 
by  the  by-laws,  the  amount  to  be  retained  during  each 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.    133 

year  of  the  progress  of  a  share  to  its  maturity  must  be 
named,  together  with  the  rate  of  interest  to  be  allowed 
on  the  value  of  the  share  at  the  time  of  the  last  distri- 
bution, and  upon  dues  thereafter  paid  until  the  with- 
drawal. 

If,  however,  the  whole  matter  of  determining  what 
shall  be  paid  upon  withdrawals  falls  upon  the  board 
of  directors,  then  the  times  of  declaring  such  with- 
drawal value  by  the  board  should  be  appointed,  to- 
gether with  any  limitations  as  to  rates  of  interest  that 
may  seem  desirable. 

In  the  history  of  building  and  loan  associations  it 
has  been  the  usual  custom  to  retain  from  the  with- 
drawing shareholder  a  part  of  the  profits.  We  deem  it 
proper  and  prudent  to  do  so.  There  is  possibility  of 
loss  upon  loans  that  have  been  made  while  the  with- 
drawing shareholder  was  a  member,  after  he  has  with- 
drawn. If  he  takes  out  all  the  profits  that  have  ac- 
crued up  to  the  last  distribution  before  his  withdrawal, 
the  remaining  shareholders  take  the  burden  of  all  the 
risks  thereafter  upon  loans  from  which  the  withdraw- 
ing shareholder  has  received  his  full  share  of  profits. 
For  this  reason  it  seems  just  to  retain  from  the  with- 
drawing shareholder,  a  share  of  the  accrued  profits. 

But  we  observe  under  the  Massachusetts  co-opera- 
tive bank  scheme  that  some  of  the  associations,  or 
co-operative  banks,  as  they  are  now  called,  allow  to 
the  withdrawing  shareholder  all  the  accrued  profits; 
but  the  greater  number  retain  one  fourth ;  some  re- 
tain one  tenth,  while  others  grade  the  amount  retained 
according  to  the  age  of  the  share  when  withdrawn. 
We  believe  it  the  wisest  course  to  leave  the  whole  sub- 
ject to  the  board  of  directors.  It  is  advisable  beyond 


134:  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

question,  it  seems  to  me,  to  encourage  withdrawals  in 
series  nearing  maturity  by  allowing  a  larger  percentage 
of  profits  to  be  withdrawn. 

When  a  large  number  of  free  shares  remain  in  a 
series  at  the  time  it  matures,  they  call  for  a  large 
amount  of  money;  and  it  will  take  so  long  to  pay 
them  off  that  discontent  is  often  produced  among  the 
holders  of  the  shares.  It  has  always  been  the  policy 
of  building  and  loan  associations  to  encourage  with- 
drawals in  series  approaching  maturity.  When  dis- 
cretionary power  is  lodged  in  the  board,  they  can 
stimulate  withdrawals  from  series  wherein  a  large 
number  of  free  shares  remain,  by  increasing  the  share 
of  profits  allowed  to  be  withdrawn.  On  the  other 
hand,  it  may  be  urged  with  force  that  when  the  per- 
centage of  profits  allowed  to  be  withdrawn  is  fixed  in 
the  by-laws,  all  know  from  the  outset  just  what  share 
they  will  be  allowed  on  withdrawing.  It  is  possible 
that  our  bias  in  favor  of  leaving  the  subject  of  with- 
drawal values  with  the  board,  to  be  fixed  at  each  dis- 
tribution, arises  from  the  fact  that  such  is  the  plan 
under  which  the  writer  has  had  his  practical  experi- 
ence. We  should  not  quarrel  with  any  one  who  dis- 
agrees with  us. 

Fines  and  Entrance  Fees. 

In  section  6  of  the  general  act  is  the  following : 
"  The  association  shall  have  power  to  impose  and 
collect  a  fine,  not  exceeding  10  per  cent  for  each 
month  in  arrears,  for  every  dollar  of  dues  or  interest 
which  a  shareholder  shall  refuse  or  neglect  to  pay  at 
the  time  it  is  due.  They  shall  also  have  power  to 
charge  an  entrance  fee  of  not  exceeding  twenty-five 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.   135 

cents  on  every  share  of  stock  issued  by  the  associa- 
tion." 

It  is  most  desirable  that  all  dues  and  interest  should 
be  paid  promptly  at  the  designated  time  each  month. 
Promptness  is  a  good  business  habit  to  cultivate.  To 
insure  this  promptness  it  is  very  beneficial  to  provide 
for  a  money  penalty  in  case  of  failure.  In  most  cases 
where  there  is  a  failure  to  pay  at  the  appointed  time 
it  is  the  result  of  f orgetf ulness.  Now,  there  is  nothing 
that  is  so  efficacious  in  overcoming  forgetfulness  as  to 
make  it  cost  money.  Hence  it  has  been  almost  a  uni- 
versal feature  in  associations  of  this  kind  to  attach  a 
fine  to  each  failure  to  pay  dues  and  interest  at  the  time 
fixed  for  such  payment. 

The  association  formed  under  the  act  in  question, 
by  its  laws  determines  the  amount  of  the  fine  to  the 
maximum  sum  of  10  per  cent.  It  can  not  fix  a 
larger  sum,  but  it  may  a  smaller.  We  believe  10  per 
cent  is  none  too  large.  Yet  many  associations  place 
it  at  a  less  per  cent.  An  entrance  fee  may  be  placed 
at  a  less  sum  than  twenty-five  cents  a  share,  but  in  our 
judgment  twenty-five  cents  is  the  best  sum.  It  helps 
out  in  the  necessary  expenses  of  the  association,  and 
is  not  felt  by  the  shareholder.  The  same  is  true  of 
the  transfer  fee. 

Annual  and  Semi-annual  Series. 

The  general  act  allows  a  new  series  to  be  issued 
annually  or  semi-annually.  We  prefer  the  annual 
series.  The  only  advantage  of  the  semi-annual  series 
is  that  the  new  stockholder  can  come  in  at  any  time 
without  paying  so  much  of  back  dues.  But  where 
there  is  an  annual  series  there  will  be  no  serious  ob- 


136  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

stacle  in  that  direction.  The  new  series  will  be  issued 
at  the  first  meeting  after  the  annual  distribution  of 
profits.  It  is  simpler  than  the  semi-annual  series,  and 
that  is  most  desirable. 

We  have  now  discussed  quite  at  length  matters  in 
which  the  general  act  allows  of  variations  in  the 
scheme  of  associations  formed  under  it,  and  which  are 
to  be  defined  and  regulated  by  the  by-laws.  It  has 
been  our  aim  to  aid  in  framing  the  by-laws.  In  the 
form  of  by-laws  found  in  the  Appendix  we  have  fol- 
lowed the  scheme  which  we  deem  wisest ;  but  they 
can  be  readily  modified  for  any  scheme  allowed  by  the 
general  act.  The  three  cardinal  principles  to  be  kept 
always  in  view  are  safety,  equality,  and  simplicity. 

Adoption  of  By-laws  and  Election  of  Officers. 

The  committee  appointed  to  frame  the  by-laws 
being  in  readiness  to  report,  a  meeting  of  the  incor- 
porators  should  be  called  to  adopt  by-laws  and  elect 
officers.  It  is  wise  to  give  a  general  notice  of  this 
meeting,  inviting  all  who  may  wish  to  learn  about  the 
workings  of  the  scheme  to  be  present.  The  explana- 
tions given  by  the  committee  in  making  their  report, 
and  the  discussions  that  are  likely  to  arise,  will  aid 
much  i$  giving  a  clear  idea  to  those  in  attendance  of 
the  beneficent  objects  of  the  association,  and  may  in- 
duce many  to  become  shareholders  at  the  first  meeting 
for  issuing  stock.  The  by-laws  will  fix  the  first  meet- 
ing for  issuing  stock  and  paying  dues.  Sufficient  time 
should  elapse  between  the  meeting  when  officers  are 
elected  and  the  meeting  for  issuing  stock  and  paying 
dues,  to  permit  of  the  by-laws  being  printed.  There 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1887.  137 

should  be  adopted  at  the  meeting  for  the  election  of 
officers  a  form  of  seal  for  the  association. 

Passbooks  and  Certificates  of  Stock. 

The  certificates  of  stock  should  be  nicely  printed 
on  good  paper,  in  two  colors  of  ink,  with  such  adorn- 
ments as  may  be  practicable  where  the  printing  is 
done.  As  a  suggestion  for  a  form,  see  form  in  Ap- 
pendix. They  must  be  signed  by  the  president  and 
secretary,  and  also  bear  the  imprint  of  the  seal  of  the 
association.  There  will  be  issued  to  every  shareholder 
at  the  time  he  receives  his  stock  a  passbook.  For 
suggestion  as  to  the  form  and  manner  of  preparing 
passbook,  see  Appendix. 


10 


CHAPTER  VIII. 

HOW  TO  ORGANIZE  ASSOCIATIONS  UNDER  THE  NEW 
YORK  ACT  OF  1851,  AND  IN  ANY  STATE  WHERE 
THE  LAW  DOES  NOT  PROVIDE  A  DEFINITE 
SCHEME. 

THE  act  of  1851  is  very  general  in  its  terms.  It 
is  so  broad  that  it  will  permit  of  the  incorporation  of 
an  association  upon  any  scheme  that  has  been  or  may 
be  devised  for  conducting  the  business  of  a  building 
and  loan  association,  or  an  accumulating  fund  asso- 
ciation. 

Unless  one  is  somewhat  familiar  with  the  character 
of  these  associations  he  will  not  be  able  to  form  a  cor- 
rect impression  respecting  them  by  reading  this  law 
for  their  incorporation.  This  is  a  defect  common  to 
the  laws  of  most  of  the  States  of  the  Union  authoriz- 
ing the  incorporation  of  such  associations. 

Section  1  of  the  act  of  1851  provides  as  follows : 

Any  number  of  persons,  not  less  than  nine,  may  associate 
and  form  an  incorporated  company  for  the  purpose  of  ac- 
cumulating a  fund  for  the  purchase  of  real  estate,  the  erection 
of  buildings,  or  the  making  of  other  improvements  on  lands, 
or  to  pay  off  incumbrances  thereon  and  removing  incum- 
brances  therefrom  ;  and  for  the  further  purpose  of  accumu- 
lating a  fund  to  be  returned  to  its  members  who  do  not 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.   139 

obtain  advances  as  above  mentioned,  when  the  funds  of  such 
association  shall  amount  to  a  certain  sum  per  share,  to  be 
specified  in  the  articles  of  association. 

The  second  section  provides  what  shall  be  con- 
tained in  the  articles  of  association,  and  is  as  follows : 

Such  persons  shall  severally  subscribe  articles  of  associa- 
tion, in  which  shall  be  set  forth  the  name  of  the  corporation, 
the  tune  of  its  regular  meetings,  and  how  special  meetings 
may  be  called,  and  what  shall  constitute  a  quorum  to  trans- 
act business  at  meetings  ;  the  qualification  of  members,  and 
how  constituted  ;  what  officers,  trustees,  and  attorney  there 
shall  be,  and  how  and  when  chosen,  and  their  duties,  and 
how  removed  or  suspended  from  office  ;  the  entrance  fee  of 
new  members  and  new  shares,  the  monthly  or  weekly  dues 
per  share,  the  redemption  fee  on  shares  on  which  advances 
shall  be  made,  and  fees  to  be  paid  on  the  transfer  of  shares  ; 
the  fines  or  penalties  for  non-payment  of  dues  or  fees,  or 
other  violation  of  the  articles  of  association  ;  the  manner  of 
redemption  of  shares  by  advances  made  thereon,  the  mort- 
gaged security  to  be  taken  on  such  advances,  and  how  the 
same  may  be  redeemed  or  changed  ;  the  manner  of  the  trans- 
fer or  withdrawal  of  shares  ;  the  manner  of  investing  funds 
not  required  for  advances  on  shares  ;  the  qualifications  of 
voters  at  meetings,  and  the  mode  of  voting  ;  the  ultimate 
amount  to  be  paid  to  the  owners  of  unredeemed  shares  ;  the 
manner  of  altering  or  amending  the  articles  of  association, 
and  such  other  provisions  as  shall  be  necessary  for  the  con- 
venient and  effective  transaction  of  the  business  thereof  ; 
provided  that  the  same  shall  not  in  any  respect  contravene 
the  Constitution  or  laws  of  this  State. 

The  third  section  provides  for  the  authentication 
of  the  articles  of  the  association  when  they  are  exe- 
cuted, and  where  they  should  be  filed,  and  reads  as 
follows : 


140   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

A  true  copy  of  such  articles,  signed  by  the  officers  of  the 
association,  together  with  a  statement  showing  when  the 
association  was  organized,  and  the  place  of  the  transaction 
of  its  business,  and  the  names  of  the  officers  and  trustees  at 
the  time  of  making  of  such  statement,  which  shall  be  verified 
by  oath  or  affirmation  before  any  officer  authorized  to  take 
affidavits,  to  be  used  in  courts  of  justice,  shall  be  filed  in  the 
office  of  the  clerk  of  the  county  in  which  such  association 
shall  transact  its  business  ;  and  thereupon  the  persons  who 
have  subscribed  the  articles  of  association  as  aforesaid,  and 
such  other  persons  as  shall  become  members  of  the  associa- 
tion, and  their  successors,  shall  be  a  body  corporate  by  the 
name  specified  in  such  articles  of  association,  and  shall  pos- 
sess the  powers  and  privileges,  and  be  subject  to  the  provis- 
ions of  title  third  of  chapter  eighteen  of  the  first  part  of 
the  Revised  Statutes,  so  far  as  those  provisions  are  consistent 
with  the  provisions  of  this  act,  and  they  shall  by  their  cor- 
porate name  be  capable  in  law  of  purchasing,  holding,  and 
conveying  any  real  and  personal  estate  whatever  which  may 
be  necessary  to  enable  said  company  to  carry  on  their  opera- 
tion named  in  such  certificate. 

The  whole  act,  with  the  acts  amendatory  thereof, 
will  be  found  in  the  Appendix. 

The  first  step  in  the  work  of  organization  is  to 
secure  nine  or  more  persons  who  will  unite  in  the  un- 
dertaking. Whoever  becomes  interested  in  forming 
such  an  association,  and  it  will  usually  be  one  person 
in  the  beginning,  in  casting  about  among  his  friends 
to  find  others  to  join  with  him,  should  keep  clearly  in 
mind  the  importance  of  securing  good  men  to  become 
incorporates,  men  who  stand  well  in  the  community, 
and  who  will  make  good  officers  for  the  association. 
It  is  not  well  to  stop  when  nine  are  secured.  There 
ought  to  be  a  much  larger  number,  and  the  larger  the 
number  the  better.  Having  secured  as  large  a  num.- 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.    14-1 

her  as  is  practicable,  the  next  step  is  the  meeting  for 
the  adoption  of  the  articles  of  association,  and  for  the 
election  of  officers.  The  drafting  of  these  articles  and 
their  adoption  is  a  most  important  matter.  The  arti- 
cles not  only  constitute  the  charter  of  the  association, 
but  must  outline  the  scheme  upon  which  the  business 
of  the  association  is  to  be  conducted.  It  usually  oc- 
curs that  the  person  who  has  been  active  in  having 
the  association  formed  is  more  or  less  familiar  with 
the  operation  of  these  associations,  and  has  a  printed 
copy  of  the  articles  of  association  of  one  of  them.  If 
the  incorporators  wish  to  organize  upon  the  same 
scheme,  these  articles  may  be  easily  changed  in  the 
matter  of  names,  dates  for  meetings,  etc.,  and  then 
adopted.  If  no  such  copy  is  at  hand,  it  may  be  ob- 
tained by  writing  to  the  secretary  of  some  other  asso- 
ciation, and  requesting  a  copy. 

But  by  this  method  the  faults  in  the  scheme  of  one 
association  are  often  perpetuated  in  another.  It  has 
been  a  common  occurrence  to  adopt  articles  of  associa- 
tion which  the  incorporators  did  not  understand,  and 
from  want  of  proper  information  upon  the  subject 
they  were  not  competent  to  judge  whether  the  pro- 
visions contained  in  them  were  good  or  bad,  or  whether 
they  accurately  outlined  the  scheme  upon  which  they 
wished  the  business  of  their  association  to  be  con- 
ducted. 

There  are  probably  in  the  State  of  New  York  at 
the  present  time  not  far  from  270  associations  in- 
corporated under  the  act  of  1851.  An  examination 
of  their  articles  of  association  will  show  an  endless 
variety  in  their  language  and  their  provisions.  To 
select  the  articles  of  association^eftprRt>JF#'*e£  them 


UFI7IRSIT71 


142  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

as  a  precedent  and  stop  at  that  would  not  be  sufficient 
for  my  purpose.  It  is  my  aim  to  give  such  informa- 
tion upon  the  subject  as  will  enable  those  forming  an 
association  to  frame  articles  that  will  be  suitable  to 
the  scheme  upon  which  they  desire  to  conduct  their 
business.  To  accomplish  this  there  is  no  better  way 
than  to  give  a  precedent  for  the  articles  of  association 
or  constitution,  as  they  are  sometimes  termed,  section 
by  section,  and  under  each  section  explain  the  varia- 
tions and  the  phraseology  in  the  section  necessary  to 
adapt  it  to  the  principal  schemes  upon  which  these 
associations  are  conducted.  In  this  way  we  shall  hope 
to  accomplish  better  results  than  by  placing  precedents 
in  the  Appendix,  and  discussing  them  here  in  a  gen- 
eral way.  The  beginning  of  the  articles  of  association 
is  properly  a  preamble,  and  we  so  name  it. 

PREAMBLE. 

We,  whose  names  are  hereto  subscribed,  under  the  pro- 
visions of  the  laws  of  the  State  of  New  York,  and  especially 
an  act  entitled  ' '  An  act  for  the  incorporation  of  building, 
mutual  loan,  and  accumulating  fund  association,"  passed 
April  10,  1851,  and  the  acts  amendatory  thereof,  do  hereby 
associate  ourselves  and  form  an  incorporate  association  for 
the  purposes  named  in  section  1  of  said  act,  viz.,  for  the  pur- 
pose of  accumulating  a  fund  for  the  purchase  of  real  estate, 
the  erection  of  buildings,  or  the  making  of  other  improve- 
ments on  lands,  or  to  pay  off  incumbrances  thereon,  or  to  aid 
its  members  in  acquiring  real  estate,  making  improvements 
thereon,  removing  incumbrances  therefrom,  and  for  the 
further  purpose  of  accumulating  a  fund  to  be  returned  to  its 
members  who  do  not  obtain  advances  as  above  mentioned, 
when  the  funds  of  such  association  shall  amount  to  a  certain 
sum  per  share  to  be  specified  in  the  articles  of  association  ; 
and  we  do  hereby  adopt  the  following  articles  of  association 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851. 

for  the  government  of  such  association  and  the  management 
of  its  business. 

An  association  organizing  in  any  other  State  can 
adopt  this  preamble  by  simply  changing  the  name  of 
the  State,  and  inserting,  in  lieu  of  the  act  therein 
quoted,  the  title  of  the  act  under  which  the  association 
is  to  be  formed,  and  the  purposes  for  which  the  law 
authorizes  an  association,  to  be  created. 

ARTICLE  ONE. 

NAME  AND   PLACE   OF   BUSINESS. 

SECTION  1.  The  corporate  name  of  this  association  shall 

be  "The Association,"  and  its  place  of  business  at 

,  in  the  State  of  New  York. 

Any  name  may  be  selected  for  the  association  which 
suits  the  fancy  of  those  engaged  in  organization.  Care 
should  be  taken  not  to  adopt  the  name  of  any  other 
association  already  existing  in  the  same  State.  It  is 
advisable  to  adopt  as  part  of  the  name  the  name  of 
the  place  where  the  association  is  located. 

ARTICLE  TWO. 

CAPITAL   AND   STOCK. 

SECTION  1.  The  capital  of  this  association  shall  consist  of 
the  accumulated  savings  of  its  stockholders,  paid  in  upon 
stock,  with  the  profits  arising  from  the  investment  thereof  to 
be  made  as  hereinafter  provided. 

SECTION  2.  The  matured  value  of  shares  of  stock  shall  be 

dollars.  The  stock  shall  be  issued  in yearly 

series,  and  after  a  new  series  has  begun  to  be  issued,  no  stock 
shall  issue  in  a  prior  series.  The  total  number  of  shares  of 

stock  outstanding  at  any  one  time  shall  not  exceed 

thousand  shares. 


144  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

The  amount  of  the  matured  share  may  be  any  sum, 
but  for  convenience  it  should  be  fixed  at  $50,  $100, 
$200,  or  $500.  The  series  may  be  issued  quarter- 
yearly  or  semi-yearly.  The  limit  of  the  number  of 
shares  should  be  controlled  by  the  matured  value  of 
shares  and  the  extent  of  business  which  the  association 
expects.  With  the  matured  value  of  shares  at  $200, 
10,000  shares  is  a  proper  limit. 

Who  may  become  Stockholders. 

SECTION  3.  Any  person,  except  as  hereinafter  limited,  who 
is  acceptable  to  the  board  of  directors,  may  become  a  stock- 
holder, and  thereby  a  member  of  the  association  by  subscrib- 
ing these  articles  of  association,  and  taking  one  or  more 
shares  of  stock,  and  paying  the  entrance  fees  and  dues  there- 
on, as  hereinafter  provided.  Parents  and  guardians  may 
take  and  hold  shares  in  the  association  as  trustees  in  behalf 
of  their  minor  children  or  wards,  provided  the  cost  of  such 
shares  be  paid  from  the  personal  earnings  of  such  minor 
children  or  wards,  or  by  gifts  from  persons  other  than  their 
male  parents.  Married  women  may  take  and  hold  shares  in 
the  association,  provided  the  cost  of  such  shares  be  paid 
from  their  personal  earnings,  the  personal  earnings  of  their 
children  voluntarily  bestowed  for  such  purpose,  or  from 
property  bequeathed  or  given  to  them  by  persons  other  than 
their  husbands.  Such  parents  or  guardians,  as  trustees  for 
their  children  or  wards,  shall  be  members  of  the  association, 
and  entitled  to  all  the  rights  thereof  as  though  they  owned 
the  stock  personally,  except  as  hereinafter  limited.  Upon  a 
minor  child  becoming  of  age,  the  stock  so  held  for  him  shall 
be  transferred  to  him,  and  he  shall  become  a  member,  and 
the  membership  of  his  trustee,  on  account  of  such  stock, 
shall  cease. 

The  above  provisions  in  reference  to  parents, 
guardians,  and  married  women,  and  the  sources  from 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.  145 

which  payments  made  upon  stock  held  by  such  classes 
of  persons  must  be  derived,  is  substantially  quoted 
from  section  6  of  the  act  of  1851.  Except  for  such 
requirement  of  the  law,  we  should  not  insert  it.  In 
case  of  married  women,  the  stock  will  be  issued  in 
their  name.  In  the  case  of  a  minor  child  or  children, 

it  should  be  issued  to ,  trustee  for ,  the 

name  of  the  parent  or  guardian  being  put  in  the  first 
blank  and  the  name  of  the  child  or  children  in  the 
second  blank. 

SECTION  4.  A  certificate  of  stock  shall  be  issued  to  every 
stockholder,  signed  by  the  president  and  secretary,  and  under 
the  seal  of  the  association.  Such  certificate  shall  state  the 
number  of  shares  it  represents,  and  the  number  of  the  series 

of  stock  in  which  it  is  issued.     An  entrance  fee  of  

cents  per  share  shall  be  paid  to  the  association  upon  the 
issuing  of  the  certificate.  Such  certificate  of  stock  may  be 
assigned  by  the  owner  thereof,  or  his  duly  authorized  attorney 
in  the  presence  of  the  secretary  or  president  of  the  associa- 
tion ;  but  such  assignment  shall  be  subject  to  all  the  rights 
of  the  association  in  the  stock  assigned.  The  assignee,  hav- 
ing obtained  the  approval  of  the  board  of  directors,  may  sign 
the  articles  of  association,  and  upon  complying  with  the  re- 
quirements thereof  shall  become  a  member  of  the  association. 
The  association,  at  their  option,  may  take  up  the  assigned 
certificate  and  issue  a  new  certificate  to  the  assignee.  For 
every  share  assigned,  there  shall  be  paid  to  the  association  a 
transfer  fee  of cents. 

A  proper  sum  for  the  entrance  fee  is  twenty-five 
cents  per  share,  and  for  the  transfer  fee  fifteen  cents  a 

share. 

Payments  on  Stock. 

SECTION  5.  All  payments  upon  stock  other  than  entrance 
and  transfer  fees  shall  be  known  as  ' '  dues. "  Each  stockholder 


14:6   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

shall  pay  upon  each  share  of  stock  held  by  him,  at  or  before 

every meeting  for  the  payment  of  dues,  the  sum  of 

,  until  the  share  of  stock  has  reached  its  matured  value, 

when  the  association  shall  pay  the  same  to  him,  as  herein- 
after provided  in  these  articles  of  association. 

Whether  the  payments  shall  be  weekly  or  monthly 
depends  upon  the  scheme  adopted  by  the  association, 
and  the  amount  to  be  paid  at  each  meeting  will  be 
largely  influenced  by  the  same  consideration.  It  is 
usual,  where  weekly  payments  are  required,  to  make 
the  dues  twenty-five  cents,  and  when  monthly,  one 
dollar.  The  matured  value  of  the  shares  will  also  in- 
fluence the  amount  required  for  dues  at  each  meeting. 
For  convenience  the  dues  should  be  twenty-five  cents, 
fifty  cents,  one  dollar,  etc. 

Free  Shares,  Borrowed  Shares,  and  Limit  of  Holding. 

SECTION  6.  Shares  of  stock  upon  which  no  loan  has  been 
made  shall  be  known  as  "free  shares,"  while  shares  of  stock 
upon  which  loans  have  been  made  shall  be  known  as  "bor- 
rowed shares."  No  stockholder  shall  hold  more  than 

shares  in  any  one  series,  except  that  he  may,  in  addition 

thereto,  hold shares  as  trustee  for  a  minor  child  or 

children  ;  but  he  shall  not  be  allowed  to  vote  upon  such  ad- 
ditional shares  held  as  trustee,  and  except  further  that  the 
board  of  directors  may  allow  a  borrower  to  hold ad- 
ditional shares  for  the  purpose  of  borrowing  upon  them. 

But  no  stockholder  shall  hold  more  than borrowed 

shares  altogether. 

Limiting  the  number  of  shares  is  to  prevent  a  few 
obtaining  control.  A  safe  limit  is  ten  shares  in  each 
series.  The  limit  to  be  placed  upon  borrowed  shares 
should  be  controlled  by  the  class  of  property  upon 
which  the  association  expects  to  make  loans. 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.  147 
ARTICLE  THREE. 

OFFICERS  :    THEIR  ELECTION  AND   DUTIES. 

SECTION  1.  The  officers  of  this  association  shall  be  chosen 
from  among  the  stockholders,  and  shall  be  a  president,  vice- 
president,  secretary,  treasurer,  and  nine  directors,  all  of 
whom  shall  constitute  the  board  of  directors  of  the  associa- 
tion. In  addition  thereto,  the  board  of  directors  shall  ap- 
point a  suitable  attorney,  who  shall  be  subject  to  removal  by 
them  without  notice  at  any  time.  Said  officers  shall  be 
chosen  annually  at  the  annual  meeting  of  the  association  in 
each  year  ;  their  election  shall  be  by  ballot,  and  each  share 
of  stock  not  in  arrears,  except  as  limited  by  these  articles  of 
association,  shall  be  entitled  to  one  vote.  In  case  there 
shall  be  a  failure  for  any  cause  to  elect  officers  at  the  regular 
time  appointed  for  the  annual  meeting,  a  special  meeting  of 
the  stockholders  may  thereafter  be  called  for  the  purpose  of 
electing  said  officers.  All  officers  shall  continue  in  office 
until  their  successors  shall  have  been  duly  elected  and  quali- 
fied. 

Whether  all  the  directors  shall  be  elected  annu- 
ally or  whether  they  shall  be  divided  into  classes  and 
one  part  of  them  elected  annually  is  a  matter  upon 
which  the  practice  of  associations  differs.  We  have 
given  our  views  upon  that  question  fully  in  Chapter 
VII,  and  need  not  repeat  them  here.  We  think  the 
majority  of  associations  allow  one  vote  only  for  each 
stockholder,  regardless  of  the  amount  of  stock  held  by 
him.  If  the  incorporators  wish  to  follow  this  rule, 
the  above  proposed  section  should  be  modified  accord- 
ingly. If  the  incorporators  deem  it  advisable  to  have 
the  directors  hold  office  longer  than  one  year,  the 
above  section  should  be  modified  to  conform  to  the 
scheme  which  they  adopt. 


148   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

Suspension  and  Removal  of  Officers. 

SECTION  2.  The  board  of  directors,  by  a  two  thirds  vote 
at  a  regular  meeting,  or  a  special  meeting  called  therefor, 
shall  have  power  to  suspend  any  officer  of  the  association  for 
cause  ;  whereupon  a  special  meeting  of  the  stockholders  of 
the  association  shall  be  called,  in  the  manner  prescribed  by 
these  articles,  to  consider  such  suspension.  At  the  time  of 
calling  such  special  meeting,  notice  thereof,  with  the  charges 
and  specifications  in  writing  against  the  offending  officer, 
shall  be  served  upon  him  personally,  or  left  at  his  last  place 
of  residence.  At  such  special  meeting,  or  a  meeting  ad- 
journed therefrom,  the  offending  officer  shall  be  reinstated 
or  removed  by  a  majority  vote  of  the  stock  represented  at 
such  meeting. 

In  the  event  the  association  should  adopt  the  mode 
of  allowing  each  shareholder  to  cast  one  vote  instead 
of  voting  upon  his  stock,  the  above  should  be  changed 
to  read  "  by  a  majority  vote  of  the  stockholders  pres- 
ent at  such  meeting." 

Vacancies. 

SECTION  3.  In  case  of  a  vacancy  occurring  in  any  office 
by  the  death,  resignation,  or  removal  of  any  officer,  the 
board  of  directors  shall  have  power  to  fill  such  vacancy  until 
the  next  annual  election,  or  until  the  stockholders  shall  hold 
an  election  to  fill  such  vacancy. 

Duties  of  President. 

SECTION  4.  The  president  shall  preside  at  all  meetings  of 
the  stockholders  and  of  the  board  of  directors,  sign  all  cer- 
tificates of  stock  and  all  orders  properly  drawn  upon  the 
treasurer  for  the  payment  of  appropriations  of  moneys,  see 
that  each  officer  performs  his  duties  and  that  the  laws  of  the 
association  are  enforced,  and,  when  directed  by  the  board  of 
directors,  to  duly  execute  discharges  and  acquittances  of 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.    149 

bonds  and  mortgages,  and  faithfully  and  impartially  dis- 
charge all  the  duties  of  his  office. 

In  some  associations  the  articles  of  association  pro- 
vide that  the  president  shall  discharge  any  bond  or 
mortgage,  when  entitled  to  be  discharged,  without 
direction  from  the  board  of  directors.  We  prefer  the 
course  indicated  above,  which  requires  the  board  of 
directors  to  direct  the  discharge  before  the  president 
has  power  in  the  matter.  If  the  other  course  is  pre- 
ferred by  those  organizing  the  association  in  the  place 
of  the  clause  above  relating  thereto,  the  following  may 
be  used :  "  And  it  shall  be  his  duty  to  discharge  any 
bond  or  mortgage  held  by  the  association  when  the 
same  is  entitled  to  be  discharged." 

Duties  of  Vice-President. 

SECTION  5.  In  case  of  the  absence  or  disability  of  the 
president,  the  vice-president  shall  perform  his  duties.  He 
shall  also  perform  the  duties  of  president  in  all  cases  where 
any  proceedings  are  pending  against  the  president  for  his 
suspension  or  removal. 

Duties  of  Treasurer. 

SECTION  6.  The  treasurer  shall  be  the  custodian  of  all 
funds,  securities,  contracts,  and  deeds  belonging  to  the  asso- 
ciation, subject,  however,  to  the  direction  of  the  board  of  di- 
rectors. He  shall  receipt  for  all  moneys  paid  to  him,  and  pay 
all  orders  or  drafts  upon  him  ordered  by  the  board  of  directors 
and  signed  by  the  president  and  attested  by  the  secretary. 
He  shall  keep  suitable  and  accurate  books  of  account  of  all 
his  transactions,  subject  to  the  direction  of  the  board  of  di- 
rectors as  to  the  form  and  the  manner  of  keeping  the  same, 
and  shall  make  a  report  of  the  finances  of  the  association  to 
each  regular  meeting  of  the  board  of  directors,  which  report 


150  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

shall  be  filed  by  the  secretary.  His  books  of  account  shall 
be  subject  to  the  call  and  inspection  of  the  board  of  directors 
or  any  member  thereof  at  any  time,  and  shall  be  subject  to 
the  inspection  of  any  stockholder  at  all  reasonable  hours. 
He  shall  give  a  bond  with  at  least  two  sureties,  one  or  more 
of  whom  shall  not  be  connected  with  the  bank  where  he  de- 
posits the  funds  of  the  association,  in  an  amount  directed  by 
the  board  of  directors,  and  in  form  and  sufficiency  of  sureties 
subject  to  their  approval.  At  the  expiration  of  his  term  of 
office  he  shall  deliver  to  his  successor  in  office,  within  five 
days  after  the  qualification  of  such  successor,  all  moneys, 
books,  and  papers  of  the  association  in  his  possession  ;  and 
in  case  of  his  suspension  and  removal  from  office,  he  shall 
deliver  the  same  to  the  board  of  directors  upon  his  removal 
forthwith. 

The  above  provision,  requiring  that  one  or  more  of 
the  sureties  should  not  be  connected  with  the  bank 
where  the  treasurer  deposits  the  funds  of  the  associa- 
tion, may  be  omitted  if  the  incorporators  do  not  deem 
it  wise  to  require  such  a  provision.  It  usually  occurs 
that  in  case  of  a  failure  of  a  bank  that  all  persons  con- 
nected therewith  become  insolvent;  and  if  all  the 
treasurer's  sureties  upon  the  bond  were  connected  with 
the  bank,  by  a  failure  of  the  bank  the  bond  would 
become  worthless. 

Duties  of  Secretary. 

SECTION  7.  The  secretary  shall  be  present  at  all  meetings 
of  the  stockholders  and  board  of  directors  in  person,  or  have  a 
proxy  from  the  board  of  directors,  and  keep  correct  minutes 
of  the  proceedings,  which  shall  be  transcribed  into  a  suitable 
minute-book  and  read  at  the  next  meeting  for  the  approval 
of  the  board.  He  shall  sign  all  certificates  of  stock  and  all 
orders  directed  to  be  drawn  by  the  board  of  directors  upon 
the  treasurer,  and  receive  the  dues,  fines,  and  interest  and 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851. 

any  other  moneys  coming  to  the  association  when  so  directed 
by  the  board  of  directors,  and  receipt  for  the  same,  or  assist 
the  board  of  directors  or  its  committee  in  receiving  and  re- 
ceipting for  the  same  when  so  directed.  He  shall  publish 
and  serve  all  notices  and  advertisements  when  directed  or 
required  to  be  published  or  served  ;  he  shall  keep  an  accurate 
account  of  all  moneys  paid  to  the  association  ;  he  shall  keep 
a  true  account  between  the  association  and  the  shareholders, 
and  give  to  the  shareholders  at  all  times  any  desired  informa- 
tion in  relation  to  the  financial  affairs  of  the  association  ;  he 
shall  keep  such  books  of  account  and  in  such  manner  and 
form  as  the  board  of  directors  shall  require.  His  books  of 
account  shall  be  subject  to  the  call  and  inspection  of  the 
board  of  directors  or  any  member  thereof  at  any  time,  and 
shall  be  subject  to  the  inspection  of  any  stockholder  at  all 
reasonable  hours.  When  so  directed  by  the  board  of  di- 
rectors, he  shall  have  an  office,  known  as  the  office  of  the 
association,  and  be  in  attendance  thereat  at  such  hours  of  the 
day  as  they  shall  direct.  All  moneys  received  by  him  shall 

be  turned  over  by  him  to  the  treasurer  within hours 

after  the  receipt  of  the  same.  He  shall  make  such  reports  to 
the  board  of  directors  as  they  shall  require  from  time  to  time ; 
he  shall  make  a  detailed  report  of  the  business  of  the  associa- 
tion at  each  annual  meeting  and  all  other  meetings  of  the 
stockholders  when  requested  so  to  do  by  any  officer  of  the 
association.  He  shall  have  charge  of  the  correspondence  of 
the  association,  and  shall  deliver  to  his  successor  in  office, 
within  five  days  after  the  qualification  of  such  successor,  all 
books  and  papers  in  his  possession  belonging  to  the  associa- 
tion, and,  in  case  of  his  removal  from  office,  he  shall  deliver 
the  same  to  the  board  of  directors  forthwith. 

In  drafting  the  foregoing  section  we  have  endeav- 
ored to  make  it  applicable  alike  to  an  association  which 
has  a  regular  office  for  the  receipt  of  dues,  interest, 
and  fines,  and  allows  the  stockholders  to  pay  the  same 


152  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

to  the  secretary  at  any  time  prior  to  the  regular  meet- 
ing, as  well  as  to  associations  which  only  permit  dues, 
interest,  and  fines  to  be  paid  at  the  time  of  the  regular 
meetings.  In  the  latter  case  the  secretary  usually  as- 
sists the  finance  committee  of  the  board  of  directors 
in  receiving  and  receipting  for  dues,  etc.  We  believe 
it  right  in  all  cases  to  leave  the  general  control  of  the 
whole  matter  to  the  board  of  directors. 

Duties  of  Attorney. 

SECTION  8.  It  shall  be  the  duty  of  the  attorney  to  make 
abstracts  of  title,  or  examine  the  same  when  procured  by  the 
borrower  from  the  county  clerk,  of  all  real-estate  which  has 
been  offered  to  the  association  as  security  for  loans  and  ap- 
proved by  the  board  of  directors  or  its  finance  committee, 
and,  if  satisfactory,  to  indorse  his  approval  thereon.  He 
shall  prepare  all  securities  given  to  the  association,  and  see 
that  all  policies  of  fire  insurance  which  are  given  to  secure 
loans  are  in  proper  form  and  with  proper  indorsements  for 
the  security  of  the  association.  His  charges  for  such  services 
shall  be  reasonable  at  all  times,  and  subject  to  the  direction 
of  the  board  of  directors,  and  shall  be  paid  by  the  borrower, 
unless  the  board  otherwise  directs.  He  shall  see  that  all 
mortgages  are  properly  entered  for  record  before  any  ad- 
vances are  made  thereon.  He  shall  meet  with  the  board  of 
directors  as  required,  but  shall  have  no  vote.  He  shall  re- 
ceive no  compensation  for  meeting  with  the  board  from  the 
association,  except  as  they  may  direct. 

The  above  clause,  saying  that  the  attorney  shall 
have  no  compensation  for  meeting  with  the  board  of 
directors,  except  as  they  shall  direct  the  same,  is  to 
obviate  any  implied  agreement  to  pay  him  what  his 
services  are  reasonably  worth  when  he  attends  at  their 
request.  Under  the  section  as  it  stands  the  board  will 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.   153 

have  to  vote  to  give  him  the  compensation  therefor 
before  he  would  be  entitled  to  any,  although  he  should 
attend  at  their  request. 

Finance  Committee. 

SECTION  9.  The  president  shall  appoint  from  the  nine  di- 
rectors, during  the  year,  three  finance  committees  of  three 
members  each,  and  each  committee  shall  serve  for  the  term  of 
four  months.  The  appointments  shall  be  so  made  that  each 
director  shall  serve  upon  one  of  said  committees.  Such 
committee,  except  when  the  board  of  directors  shall  other- 
wise direct,  shall  pass  upon  all  securities  offered  to  the  asso- 
ciation for  loans,  subject  to  the  approval  of  the  attorney  as 
to  the  title  of  real  estate.  They  shall  examine  personally  all 
real  estate  upon  which  they  shall  pass,  as  to  its  sufficiency  as 

a  security.     They  shall  hold  a  meeting  on  the after 

each  regular  meeting  of  the  board  of  directors,  for  loaning 

money,  at  m.  o'clock.     They  shall  audit  all  bills 

against  the  association  ;  [they  shall  attend  all  regular  meet- 
ings for  the  receipt  of  dues,  interest,  fines,  etc.,  and  receive 
and  receipt  for  the  same,  and  at  the  close  of  the  meeting  turn 
the  same  over  to  the  treasurer,  and  take  his  receipt  therefor;] 
they  shall  perform  such  duties  proper  for  a  finance  com- 
mittee, as  the  board  of  directors  shall  direct. 

The  clause  above,  inclosed  in  brackets,  in  reference 
to  the  receipt  of  dues,  etc.,  by  the  finance  committee, 
should  be  omitted  when  the  association  wishes  to 
adopt  the  scheme  of  having  dues,  interest,  and  fines, 
received  wholly  by  the  secretary,  when  he  has  an  office 
for  that  purpose,  or  under  any  other  arrangements 
whereby  the  secretary  is  authorized  to  receive  and 
receipt  for  dues,  etc.,  and  in  its  stead  there  should  be 
a  clause,  in  substance,  as  follows  :  "  The  finance  com- 
mittee shall  audit  the  accounts  of  the  secretary  quar- 
11 


154:  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

terly,  and  at  such  other  times  as  the  board  of  directors 
may  order." 

Auditors  of  the  Annual  Report. 

SECTION  10.  The  president,  at  the  time  of  the  last  meeting 
for  the  receipt  of  dues,  etc.,  before  the  annual  meeting, 
shall  appoint  three  stockholders  who  are  not  officers  in  the 
association,  who  shall  examine  the  books  of  account  of  the 
treasurer  and  of  the  secretary,  and  the  annual  report  pre- 
pared by  the  secretary,  and  verify  the  same  by  an  examina- 
tion of  the  books  of  the  secretary,  and  of  the  securities  and 
funds  held  by  the  treasurer,  and  if  found  to  be  correct,  in- 
dorse their  approval  thereon. 

The  object  of  this  provision  is  to  have  a  committee 
appointed  from  the  stockholders  who  have  had  noth- 
ing to  do  with  the  management  of  the  business  during 
the  year,  for  the  purpose  of  verifying  the  results  shown 
by  the  detailed  annual  report  of  the  secretary. 

ARTICLE  FOUR. 

MEETINGS   OF   THE  ASSOCIATION. 

SECTION  1.  The  annual  meeting  of  the  stockholders  shall 

be  held  on  the day  of in  each  year,  at 

o'clock  in  the  evening. 

In  fixing  the  time  for  the  annual  meeting,  suffi- 
cient time  should  be  allowed  between  the  last  meeting 
for  the  receipt  of  dues,  etc.,  and  the  loaning  of  money 
in  the  fiscal  year,  to  enable  the  secretary  and  treasurer 
to  write  up  their  books,  and  for  the  secretary  to  pre- 
pare his  annual  report  and  have  it  printed.  It  will  be 
found  advisable  in  the  long  run  to  allow  at  least  two 
weeks  for  these  purposes. 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.    155 

Board  Meetings. 

SECTION  2.  The  board  of  directors  or  the  finance  commit- 
tee shall  hold  a  meeting  on  the day  of ,  between 

and o'clock  in  the  evening,  for  the  receipt  of 

dues,  interest,  and  fines,  and  immediately  following  such 
meeting  the  board  of  directors  shall  hold  a  meeting  for  offer- 
ing the  money  of  the  association  to  borrowers,  and  for  the 
transaction  of  any  other  business  of  the  association  which 
comes  before  the  board  of  directors. 

This  section  relating  to  the  board  or  the  com- 
mittee for  the  receipt  of  dues,  etc.,  offering  money  for 
sale,  and  transacting  other  business  of  the  association, 
will  vary  greatly  according  to  the  scheme  adopted  by 
the  incorporators  for  conducting  the  business  of  the 
association.  If  the  scheme  is  adopted  whereby  dues, 
etc.,  are  paid  to  the  secretary,  then  the  meeting  of  the 
board  should  not  be  held  until  the  time  is  up  within 
which  dues,  interest,  and  fines,  may  be  paid,  and  the 
meeting  of  the  board  will  be  for  the  purpose  of  offer- 
ing the  money  for  sale,  and  transacting  the  regular 
business  of  the  association ;  or,  instead  of  the  meeting 
for  this  purpose  at  this  time,  the  finance  committee 
may  be  authorized  to  offer  the  moneys  to  borrowers, 
and  the  meeting  of  the  board  of  directors  be  held  at 
some  other  time  for  the  transaction  of  such  business 
as  may  come  before  them.  Again,  the  section  will  be 
modified  as  the  scheme  adopted  calls  for  weekly  or 
monthly  meetings.  The  section  as  given  in  blank 
may  be  filled  up  either  for  weekly  or  for  monthly 

meetings. 

Special  Meetings  of  the  Board. 

SECTION  3.  Special  meetings  of  the  board  of  directors  may 
be  called  by  the  president  at  any  time  upon  twenty-four 


156  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

hours'  notice.  Such  notice  may  be  given  orally  by  the  presi- 
dent or  secretary,  or  by  serving  a  written  notice,  stating  the 
object  and  time  of  the  meeting,  upon  each  director,  or  by 
leaving  the  same  at  his  residence,  in  the  custody  of  some 
person  residing  therein,  of  suitable  age  and  discretion.  The 
president  shall  call  a  special  meeting  of  the  board  of  direct- 
ors, when  requested  so  to  do  by  three  members,  in  writing, 
specifying  the  purpose  for  which  they  desire  the  meeting  to 
be  called. 

It  may  seem  to  some  persons  that  the  above  pro- 
vision for  calling  the  special  meeting  of  the  board  of 
directors  allows  but  a  very  short  time;  but  in  the 
practical  management  of  an  association  it  will  fre- 
quently be  found  necessary  for  the  board  of  directors 
to  come  together  to  consider  some  matter  upon  short 
notice,  and  if  a  longer  time  than  twenty-four  hours  is 
required,  inconvenience  at  times  will  be  caused. 

Special  Meetings  of  Stockholders. 

SECTION  4.  Special  meetings  of  the  stockholders  may  be 
called  by  the  president,  and  shall  be  called  by  him  when- 
ever requested  by  ten  stockholders,  in  writing,  specifying 
the  purpose  for  which  they  desire  the  meeting  called.  Five 
days'  notice  of  any  special  meeting  for  any  purpose  shall  be 
given  by  mailing,  postage  prepaid,  to  the  post-office  address 
of  every  stockholder,  as  it  appears  upon  the  books  of  the 
association,  a  written  or  printed  notice,  stating  the  time  and 
place,  and  the  business  to  be  brought  before  the  association. 

Quorums. 

SECTION  5 stockholders  shall  constitute  a  quorum 

at  all  meetings  of  the  stockholders,  and directors  shall 

shall  constitute  a  quorum  at  all  meetings  of  the  board  of 
directors. 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1861.  157 

The  number  to  constitute  a  quorum  should  be  in- 
fluenced by  the  expectations  as  to  the  number  of  stock- 
holders. 

Post-office  Address  of  Stockholders. 

SECTION  6.  At  the  time  of  signing  the  articles  of  associa- 
tion, each  stockholder  and  trustee  shall  write  opposite  his 
name  his  post-office  address,  and  shall  notify  in  writing  any 
change  made  thereafter  in  his  post-office  address. 

The  object  of  this  section  is  to  make  suitable  pro- 
vision for  mailing  any  notices  required  to  be  given  by 
these  articles  of  association. 

ARTICLE  FIVE. 

LOANS  :    TO   WHOM  MADE. 

SECTION  1.  The  funds  of  the  association  available  for 
loans  shall  be  loaned  only  to  its  stockholders.  Every  stock- 
holder who  can  give  the  required  security  shall  have  an  equal 
right  with  every  other  stockholder  to  such  funds  to  an  amount 
not  exceeding  the  matured  value  of  the  shares  held  and  owned 
by  him.  Loans  shall  be  regarded  as  advances  upon  the  ma- 
tured value  of  the  shares  borrowed  upon,  and  shall  be  made 
only  for  the  matured  value  of  the  shares,  except,  when  neces- 
sary to  make  out  the  sum  the  borrower  desires,  the  frac- 
tional parts  of  one  fourth  or  one  half  of  a  share  may  be  so 
advanced. 

Under  the  foregoing,  if  the  matured  value  of  shares 
is  $200,  loans  must  be  in  the  sum  of  $200  or  a  multi- 
ple thereof ;  except  a  borrower  wanted  $250,  when  one 
share  and  a  quarter  could  be  loaned.  The  borrower 
would  have  to  own  two  shares  of  stock.  If  the  matured 
value  was  $100,  he  would  have  to  own  three  shares,  and 
borrow  upon  two  shares  and  one  half  of  the  third  share. 
The  section  as  proposed  limits  all  loans  to  stockhold- 


158   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

ers.  In  the  event  of  an  accumulation  and  no  demand 
for  loans,  there  should  be  forced  withdrawals,  which 
will  be  provided  for  under  the  head  of  withdrawals. 

The  Funds :  How  and  when  offered  to  Sorrowers. 
SECTION  2.  All  funds  available  for  loans  shall  be  offered 
to  borrowers  by  the  board  of  directors  or  their  financial  com- 
mittee at  an  open  meeting  held  immediately  following  the 

regular meeting  for  the  receipt  of  dues,  etc.,  or  at 

such  other  regular  and  stated  times  as  the  board  of  directors 
may  direct ;  but  in  the  event  all  of  said  funds  shall  not  be 
loaned  at  said  stated  meetings,  the  board  of  directors  or  their 
finance  committee  may  hold  special  meetings  for  the  purpose 
of  offering  such  funds  to  borrowers. 

The  offering  of  the  funds  to  borrowers  may  be  de- 
volved wholly  upon  the  board  of  directors,  in  which 
case  the  words  "  or  their  finance  committee  "  should 
be  stricken  out  wherever  it  occurs ;  or  it  may  be  con- 
fided wholly  to  the  finance  committee,  in  which  case, 
in  place  of  "  the  board  of  directors  or  their  finance  com- 
mittee," the  words  "  the  finance  committee  of  the  board 
of  directors  "  should  be  substituted ;  or  the  conducting 
of  the  sales  may  be  given  to  the  secretary,  in  which 
case  "  the  secretary "  will  be  inserted  instead  of  the 
"  board  "  or  its  "  finance  committee." 

Interest. 

SECTION  3.  Interest  on  all  loans  shall  be  at  the  rate  of 

per  cent  per  annum,  payable  in installments  at  the 

same  time  that  dues  are  paid  upon  the  stock  borrowed  upon. 

While  legal  interest  remains  at  six  per  cent,  we 
believe  it  best  to  make  it  the  interest  on  loans.  Fixing 
it  at  a  lower  rate  will  only  tend  to  increase  the  amount 
of  premium  bid. 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.    159 

Premiums. 

SECTION  4.  The  right  to  borrow  the  funds,  when  two  or 
more  stockholders  desire  the  same  at  the  times  they  are  offered 
to  the  borrowers,  shall  be  decided  by  the  bidding  of  a  premium 
per  share ;  and  the  loan  shall  be  awarded  to  the  highest  bid- 
der, and  the  premium  bid  shall  be  deducted  from  the  amount 
loaned  at  the  time  the  loan  is  paid  over  to  the  borrower. 

The  plan  proposed  in  this  section  is  the  gross 
plan,  without  the  system  of  rebates.  The  borrower 
gives  his  security  for  the  amount  borrowed.  The  pre- 
mium is  deducted  from  the  sum  loaned,  and  the  bor- 
rower thereafter  has  simply  the  interest  on  his  loan 
and  dues  on  stock  to  pay.  If  the  incorporators  prefer 
the  installment  premium  plan,  which  is  the  most 
common  at  present,  the  following  should  be  adopted 
in  place  of  the  above : 

SECTION  4.  The  right  to  borrow  the  funds,  when  two  or 
more  stockholders  desire  the  same  at  the  times  they  are  offered 
to  borrowers,  shall  be  determined  by  the  bidding  of  a  certain 
sum  per  share,  to  be  paid  monthly  in  addition  to  the  monthly 
installment  of  interest  during  the  continuance  of  the  loan  ; 
and  the  loan  shall  be  awarded  to  the  highest  bidder,  and  the 
security  given  shall  include  the  payment  of  such  monthly 
installment  of  premium. 

In  the  event  the  incorporators  should  prefer  the 
interest  premium  plan,  then  the  following  should  be 
used,  in  the  place  of  the  foregoing  sections  2  and  3. 

Premium  Interest  Plan. 

The  right  to  borrow  the  funds  when  offered  to  borrowers 
shall  be  decided  by  a  bidding  upon  the  rate  of  interest  to  be 
paid  per  annum,  payable  in  monthly  installments,  at  the  same 
time  the  dues  are  paid  upon  the  stock  borrowed  upon.  The 


160  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

loan  shall  be  awarded  to  the  highest  bidder,  provided,  how- 
ever, that  no  bid  shall  be  accepted  for  a  less  rate  than  .... 
per  cent  per  annum. 

We  have  in  preceding  chapters  fully  discussed  these 
several  premium  plans,  and  expressed  our  convictions 
as  to  the  respective  merits  of  each,  hence  we  will  not 
discuss  them  now.  We  give  no  form  for  the  gross 
plan,  with  the  system  of  rebates,  for  the  reason  that 
we  do  not  wish  to  be  responsible  in  any  degree  for  con- 
tinuing a  system  so  complex  and  so  misleading. 

Naming  Security. 

SECTION  5.  The  person  or  persons  to  whom  a  loan  or  loans 
are  awarded  shall  forthwith  furnish  to  the  board  or  their 
committee  a  full  description  of  the  security  or  securities  pro- 
posed for  the  loan  or  loans. 

The  description  of  the  securities  proposed  should 
be  passed  at  once  to  the  committee  charged  with  the 
duty  of  passing  upon  their  sufficiency.  In  place  of 
"  the  board  or  their  committee  "  above  named  should 
be  inserted  the  precise  officer  or  officers  conducting 
the  sale  as  fixed  in  the  prior  section. 

Rejected  Security. 

SECTION  6.  The  borrower  shall  pay  interest  on  his  loan  from 
the  time  the  same  is  awarded  to  him  at  the  sale  of  the  funds. 
In  the  event  he  fails  to  give  satisfactory  security,  he  shall 
pay  interest  on  the  sum  bid  off  until  the  first  stated  meeting 
for  the  loaning  of  money  after  the  rejection  of  his  securities, 
and  his  right  to  a  loan  under  his  bid  shall  be  lost. 

The  borrower  should  pay  interest  as  above  provided, 
for  the  reason  that  the  funds  must  be  set  aside  for 
him  at  once  upon  awarding  him  a  loan.  In  case  the 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1861.  161 

monthly  installment  premium  plan  is  adopted,  the 
first  line  in  the  section  should  be  amended  so  as  to 
read,  "  The  borrower  shall  pay  interest  and  the  monthly 
(or  weekly,  as  the  case  may  be)  installment  of  pre- 
mium on  his  loan,"  etc. ;  and  also  amended  below  so  as 
to  read, "  He  shall  pay  interest  and  the install- 
ment of  premium  on  the  sum  bid  off,"  etc.  A  provision 
may  also  be  incorporated  in  the  above  section  provid- 
ing that  in  case  the  loan  is  passed  for  a  less  sum 
than  bid  off,  and  the  borrower  accepts  such  reduced 
loan,  he  shall  pay  the  interest  and  installments  of  pre- 
mium, if  any,  upon  the  full  amount  bid  off  up  to  the 
first  stated  meeting  for  the  sales  of  money  after  the 
acceptance  of  the  loan.  This  latter  provision  has  a 
wholesome  effect  in  restraining  borrowers  from  over- 
estimating the  value  of  the  real  estate  they  offer  as  a 
security. 

ARTICLE  SIX. 
Security  for  Loans. 

SECTION  1.  The  security  for  all  loans  shall  be  a  bond  in 
the  penal  sum  of  twice  the  amount  loaned,  secured  by  a  first 
mortgage  upon  unincumbered  real  estate,  accompanied  by  a 
transfer  and  pledge  to  the  association  of  the  shares  borrowed 
upon  and  all  accumulations  that  have  or  shall  accrue  thereon ; 
or,  in  lieu  of  the  mortgage,  the  borrower,  or  another,  may 
transfer  and  pledge  to  the  association  free  shares,  the  with- 
drawing value  of  which  at  the  time  of  borrowing,  added  to 
the  withdrawing  value  of  the  shares  borrowed  upon,  shall 
exceed  the  amount  loaned  and  the  interest  thereon  for  six 
months.  All  bonds  and  mortgages  given  to  the  association 
shall  contain  or  refer  to  the  conditions  for  the  repayment  of 
loans  and  the  interest  thereon  prescribed  by  these  articles  of 
association. 


162  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS 

In  case  the  installment  premium  plan  is  adopted 
there  should  be  added  to  the  phrase  "  and  the  interest 
thereon,"  wherever  it  occurs,  the  words,  "  and  install- 
ments of  premium  bid."  If  desired,  a  limit  may  be 
placed  upon  the  amount  of  the  mortgage  as  related  to 
the  appraised  value  of  the  mortgaged  premises.  To 
do  this,  there  would  be  inserted  after  the  words  "  real 
estate  "  in  the  second  line,  the  words,  "  for  not  exceed- 
ing   per  cent  of  its  appraised  value  as  appraised 

by  the  finance  committee." 

Payment  of  Loans. 

SECTION  2.  The  borrower  shall  continue  to  pay  to  the  asso- 
ciation the installment  of  interest  (and install- 
ment of  premium)  until  the  shares  borrowed  upon  shall  reach 
their  matured  value,  unless  the  loan  is  otherwise  paid  be- 
fore that  time,  when  the  association  shall  discharge  the  se- 
curities and  the  borrower  shall  surrender  the  stock  borrowed 
upon.  A  borrower  may  repay  a  loan  and  all  arrearages  of 
interest  (and  installments  of  premium)  and  fines  thereon,  or 
one  share  thereof,  at  any  stated  meeting  for  the  receipt  of 
dues,  etc.,  or  to  the  treasurer  at  any  other  time  ;  but  when 
not  made  at  said  stated  meeting  he  shall  pay  interest  (and 
installments  of  premium)  up  to  the  first  regular  meeting  for 
loaning  money  after  such  payment.  He  may  pay  the  loan  in 
full,  and  thereby  entitle  him  to  have  the  shares  borrowed 
upon  released  from  liability  for  the  loan,  or  he  may  have  the 
withdrawal  value  of  the  shares  applied  as  a  part  of  the  pay- 
ment, and  surrender  his  stock  to  the  association,  and  have 
his  bond  (with  any  mortgage  accompanying  it)  discharged. 
The  board  of  directors  shall  direct  the  president  and  secre- 
tary to  execute  a  proper  discharge  of  any  security  held  by 
the  association,  when  for  any  cause  it  should  be  surrendered. 

The  blanks  at  the  beginning  of  the  section  will  be 
filled  out  with  the  words  "  weekly  "  or  "  monthly,"  ac- 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.  163 

cording  as  the  scheme  requires  weekly  or  monthly 
payments.  The  clause  in  the  brackets  will  be  omitted, 
except  when  the  installment  plan  of  premium  is 
adopted,  in  which  case  the  brackets  will  be  removed. 
Under  this  section  the  borrower  may  pay  the  whole 
loan,  or  any  share  of  the  loan,  at  any  time.  If  paid 
between  the  stated  meetings  for  the  sales  of  money, 
interest  must  be  paid  thereon  up  to  such  stated  meet- 
ing after  the  payment.  Under  this  section,  no  officer 
of  the  association  will,  on  his  own  authority,  have  the 
right  to  discharge  the  securities ;  it  must  be  authorized 
by  the  board  of  directors.  We  believe  this  to  be  the 
safest  course  ;  but  as  we  have  remarked  in  the  section 
relating  to  the  duties  of  president,  some  associations 
empower  the  president  to  discharge  without  authority 
from  the  board.  The  above  section  may  be  easily 
modified  to  adapt  it  to  such  a  course. 

Default  on  Securities. 

SECTION  3.  "Whenever  a  borrower  shall  be months 

in  arrears  in  the  payment  of  the  dues  upon  the  stock  bor- 
rowed upon  and  interest  upon  the  loan  (or  installments  of 
premium  bid)  or  either  of  them,  the  whole  loan  shall  become 
due  at  the  option  of  the  board  of  directors,  and  they  may 
proceed  to  enforce  collection  upon  the  securities  held  by  the 
association.  The  withdrawal  value,  at  the  time  of  the  com- 
mencement of  the  action,  of  all  shares  pledged  as  collateral 
security  for  the  loan  shall  be  applied  upon  the  loan  and 
arrearages  of  interest  (installments  of  premium)  and  fines 
thereon,  and  the  shares  shall  be  deemed  surrendered  to  the 
association. 

The  periods  to  be  filled  in  the  blanks  left  in  the 
foregoing  section  as  to  the  time  the  default  shall  ex- 
tend will  be  influenced  by  the  scheme  of  the  associa- 


164  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

tion  as  to  whether  it  calls  for  weekly  or  monthly  in- 
stallments. It  is  usual  to  give  six  months  in  cases 
where  the  installments  are  paid  monthly,  and  three 
months  where  the  installments  are  paid  weekly. 

Purchase  of  Real  Estate. 

SECTION  4.  The  board  of  directors  may  purchase  at  any 
public  sale  or  at  any  private  sale,  when  deemed  advisable  to 
secure  the  association  from  loss,  any  real  estate  upon  which 
the  association  may  hold  a  mortgage,  judgment  lien,  or 
other  incumbrance,  or  in  which  it  may  have  any  interest ; 
and  may  sell,  convey,  lease,  or  mortgage  the  same,  or  make 
improvements  thereon,  as  shall  seem  for  the  best  interest  of 
the  association.  Upon  the  decease  of  a  stockholder  having 
received  a  loan,  his  heirs,  legatees,  or  legal  representatives, 
or  the  persons  legally  liable  to  pay  the  loan  or  the  mortgage 
given  to  secure  the  loan,  may,  upon  subscribing  to  the  arti- 
cles of  association  and  by-laws,  succeed  to  all  the  rights  of 
the  deceased  in  the  association,  subject  to  its  rules  and  regu- 
lations. 

ARTICLE  SEVEN. 
Fines. 

SECTION  1.  Whenever  any  stockholder  shall  make  default 
in  the  payment  of  his  dues  or  interest  (or  installments  of 
premium)  at  any  regular  meeting  or  time  for  the  payment  of 

the  same,  when  due,  he  shall  pay  a  fine  of per  cent 

on  the  sum  defaulted,  and  shall  continue  to  pay  such  fine  for 
every  said  meeting  or  time  while  such  default  continues. 

The  provisions  of  this  section  are  intended  to  be 
broad  enough  to  apply  to  an  association  which  adopts 
the  plan  of  having  dues  paid  to  a  single  officer  at 
stated  times,  as  well  as  when  the  board  of  directors,  or 
its  finance  committee,  hold  stated  meetings,  weekly  or 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.   165 

monthly,  for  the  receipt  of  dues,  etc.  It  imposes  the 
fine  for  each  default.  To  illustrate,  suppose  the 
scheme  be  one  requiring  monthly  dues,  and  the  stock- 
holder makes  default  in  the  payment  of  his  dues,  etc., 
for  May,  and  makes  no  payment  in  June,  he  will  be 
fined  for  his  June  payments  and  also  on  his  May  pay- 
ment still  unpaid,  and  so  on  until  he  shall  pay  up.  As 
to  the  amount  of  the  fine,  there  is  much  diversity  in 
the  practice  of  associations.  We  believe  in  making  it 
10  per  cent.  It  should  be  large  enough  to  insure 
prompt  payment. 

Forfeitures. 

SECTION  2.  In  the  event  any  stockholder  holding  free 
shares  shall  be  six  months  in  arrears,  at  any  time,  for  dues 
thereon,  the  secretary  shall  serve  upon  him  personally  a  no- 
tice showing  said  stockholder's  arrearages  upon  said  free 
shares,  and  requiring  him  to  pay  said  arrearages  within  sixty 
days  from  the  service  of  notice,  or  his  said  shares,  and  all 
dues  previously  paid  thereon,  will  be  forfeited  to  said  asso- 
ciation ;  and  in  the  event  a  personal  service  of  said  notice 
can  not  be  made,  a  publication  thereof  in  a  daily  or  weekly 

newspaper,  published  in  the of ,  once  in  each 

week,  for  six  successive  weeks,  shall  be  deemed  equivalent 
to  a  personal  service,  and  the  sixty  days  within  which  said 
defaulting  stockholder  may  pay  up  his  arrearages  in  case  of 
service  by  publication,  shall  commence  on  the  day  of  the  last 
publication;  and  in  the  event  such  defaulting  stockholder 
shall  not  pay  up  the  arrearages  aforesaid  within  the  sixty 
days  aforesaid,  the  board  of  directors,  at  any  regular  meeting 
thereof,  by  a  majority  vote,  may  declare  such  defaulting 
stockholder's  free  shares  forfeited  to  said  association,  and 
all  moneys  previously  paid  thereon,  and  thereupon  he  shall 
cease  to  be  a  member  of  said  association  for  any  purpose 
whatever. 


166  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

This  section  is  framed  to  meet  the  requirements  of 
section  4  of  the  act  of  1851.  In  framing  articles  of 
association  under  any  other  act  in  the  State  of  New 
York  or  elsewhere,  it  would  be  necessary  for  the  incor- 
porators  to  refer  to  the  act  under  which  they  were  in- 
corporated, and  determine  whether  there  was  any  pro- 
vision in  the  act  limiting  the  power  of  forfeiture. 
If  the  general  act  contained  no  limitations  upon  the 
power  of  the  association  in  declaring  stock  forfeited 
upon  which  default  has  been  made  in  the  payment  of 
dues  thereon,  then  a  section  might  be  drawn  to  take 
the  place  of  the  above,  in  language  substantially  as 
follows :  "  The  board  of  directors  shall  have  power,  in 

the  case  of  a   stockholder months  in  arrears  in 

payment  of  his  dues,  to  declare  his  stock  forfeited 
and  all  moneys  due  thereon  from  the  association,  in  the 

event  he  shall  not  pay  the  same  within days  after 

a  notice  of  the  amount  of  his  arrears  has  been  duly 
served  upon  him  personally,  or  left  at  his  place  of 
residence,  as  shown  by  the  books  of  the  association, 
with  some  person  of  suitable  age  and  discretion  by  the 
secretary  of  the  association ;  and  if  no  person  of  suit- 
able age  and  discretion  can  be  found  at  said  residence, 
then  by  affixing  said  notice  to  the  front  door  thereof ; 
but  this  section  shall  not  apply  in  case  default  in  pay- 
ment has  arisen  by  reason  of  the  death  of  the  default- 
ing stockholder." 

ARTICLE  EIGHT. 

DISTRIBUTION   OF   PROFITS   AND   LOSSES. 

SECTION  1.  Profits  and  losses  shall  be  distributed  at  least 
annually,  and  always  before  issuing  a  new  series  of  stock. 
Profits  shall  be  distributed  in  the  form  of  a  dividend  added 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.    167 

to  the  value  of  each  share  outstanding  which  has  not  ma- 
tured. The  dividend  thus  added  to  each  share  shall  bear 
the  same  rate  of  percentage  to  the  value  of  the  share  that 
the  total  net  profits  to  be  distributed  bear  to  the  total 
value  of  all  the  shares  to  which  the  distribution  is  made. 
In  ascertaining  the  total  net  profits  to  be  thus  distributed, 
which  have  accrued  since  the  last  distribution,  any  losses 
sustained  during  that  time  shall  be  deducted  from  the  gross 
profits.  In  the  event  the  losses  sustained  shall  exceed  the 
profits,  then  the  profits  shall  be  deducted  from  the  gross 
loss,  and  the  net  loss  shall  be  assessed  upon  each  share  of 
stock  outstanding  upon  the  same  principle  above  given  for 
adding  dividends,  and  the  sum  assessed  upon  each  share  shall 
be  subtracted  therefrom. 

Matured  stock  shall  not  share  in  dividends  or  be  liable 
for  losses,  but,  instead  thereof,  each  matured  share,  from 
the  time  of  its  maturity  until  paid  off,  shall  draw  interest 

at  the  rate  of per  cent  per  annum,  to  be  paid  when 

the  stock  is  paid. 

This  system  of  distributing  profits  and  losses  is 
simple,  just,  and  equitable.  It  treats  all  stockholders 
as  partners,  and  each  partner  receives  profits  in  pro- 
portion to  the  capital  which  he  has  in  the  association, 
and  treats  as  part  of  such  capital  all  dividends  made 
to  him.  We  have,  in  Chapter  III,  discussed  the 
manner  of  declaring  the  dividend.  We  give  an  illus- 
tration in  Chapter  IX.  It  should  be  clearly  borne 
in  mind  that  premiums  not  yet  paid  are  not  profits. 
Nothing  should  be  counted  as  profits  in  declaring 
dividends  which  has  not  been  actually  paid  in.  In 
those  associations  that  have  already  adopted,  or  should 
foolishly,  as  it  seems  to  me,  hereafter  adopt  the 
gross  plan  of  premium  with  a  system  of  rebates, 
whereby  the  borrower  is  allowed  a  rebate  of  one  eighth 


168  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

or  one  ninth  or  one  tenth  upon  the  premium  for  each 
full  year  of  the  time  remaining  in  which  it  is  assumed 
it  will  take  the  stock  to  mature  upon  which  the  loan 
is  made,  in  case  he  shall  repay  his  loan,  in  ascertaining 
the  amount  of  profits  to  distribute,  loans  should  not  be 
reckoned  at  their  face  value,  but  only  at  the  sum  the 
association  would  receive  if  paid  off  at  that  time — in 
fact,  their  present  value.  Upon  this  rock  many  asso- 
ciations have  come  to  grief.  While  they  had  as  a  part 
of  their  scheme  the  rebate  system,  they  have  reckoned 
their  loans  outstanding  in  computing  assets  at  their 
face  value,  or  apparent  value ;  whereas  their  real  value 
was  the  sum  which  would  pay  them  off  at  the  time 
the  dividend  was  declared.  Matured  stock  should 
not  be  allowed  dividends.  They  are  awaiting  pay- 
ment, and  the  rate  of  interest  allowed  should  be  low. 
We  suggest  three  per  cent.  Matured  stock  should  be 
paid  off  as  rapidly  as  the  association  has  funds  appli- 
cable to  such  purpose. 

ARTICLE  NINE. 

WITHDRAWALS,    AND   HOW   COMPUTED. 

This  is  an  important  matter,  and  one  in  which  in 
practice  great  diversity  exists.  It  involves  two  distinct 
questions :  1.  As  to  what  percentage  of  the  profits 
which  have  been  added  to  the  stock  shall  the  associ- 
ation retain  from  the  withdrawing  stockholder?  2. 
Shall  it  be  determined  and  fixed  by  the  articles  of 
association,  or  shall  the  power  of  determining  the  same 
from  time  to  time  be  lodged  in  the  board  of  directors  ? 
We  will  give  a  form  of  a  proper  article  for  either 
course ;  and  first  we  give  the  form  of  an  article  which 
fixes  definitely  the  share  returned.  It  can  be  adapted 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.   169 

to  any  rate  per  cent  by  simply  changing  the  rate  per 
cent  we  have  used. 

SECTION  1.  Any  stockholder  owning  free  shares  may  with- 
draw the  same,  upon  filing  a  written  notice  of  his  intention  so 
to  do  with  the  secretary,  and  at  the  next  meeting  of  the 
board  of  directors  they  shall  direct  orders  upon  the  treasurer 
to  be  drawn  to  pay  such  stockholders  desiring  to  withdraw, 
according  to  the  priority  in  the  filing  of  such  notices,  as 
soon  as  there  are  funds  applicable  to  the  payment  of  with- 
drawing stockholders  under  the  provisions  of  these  articles 
of  association.  Such  withdrawing  stockholder  shall  re- 
ceive, less  any  fines  he  may  owe,  during  the  first  six  months 
the  series  has  run  in  which  the  stock  withdrawn  was  issued, 
the  amount  of  dues  paid  thereon,  and  during  the  last  six 
months  of  the  first  year  he  shall  receive  the  dues  paid  thereon 
and  interest  at  the  rate  of  four  per  cent  per  annum  ;  and 
after  the  first  year  and  until  the  close  of  the  sixth  year  in 
the  age  of  the  series  in  which  the  stock  withdrawn  was 
issued,  he  shall  receive  the  dues  paid  thereon,  and  seventy- 
five  per  cent  of  the  profits  which  have  been  added  to  said 
shares  in  dividends  up  to  and  including  the  last  distribution 
of  profits  and  losses  before  such  withdrawal,  together  with 
four  per  cent  interest  thereon  from  the  last  distribution,  to 
which  shall  be  added  also  dues  paid  since  such  distribution 
and  four  per  cent  interest  thereon.  During  the  seventh  year 
of  the  series  of  stock,  he  shall  receive  eighty  per  cent  of  the 
profits,  instead  of  seventy-five  as  above  ;  during  the  eighth 
year,  eighty-five  per  cent ;  during  the  ninth  year,  ninety  per 
cent ;  and  during  the  tenth  year  and  until  the  series  mature, 
ninety-five  per  cent. 

We  believe  the  rates  given  above  are  just  and 
equitable.  In  the  event,  however,  that  a  "  guarantee 
fund"  should  be  created  and  carried,  then  a  larger 
percentage  of  the  profits  might  be  given  to  the  with- 
drawing stockholder.  The  reasons  for  increasing  the 
12 


170  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

percentage  as  the  stock  approaches  maturity  is  to 
stimulate  withdrawals,  in  order  that  when  a  series 
matures  there  shall  not  be  a  large  number  of  free 
shares  remaining.  The  following  is  a  form  in  which 
the  power  of  determining  the  withdrawal  value  is 
lodged  with  the  board  of  directors  within  certain  lim- 
itations. That  portion  of  the  foregoing  form  preced- 
ing the  first  period  will  be  used  with  it : 

The  board  of  directors,  at  each  meeting  held  for  making 
and  declaring  a  distribution  of  profits  and  losses,  shall  also 
determine  the  withdrawal  value  of  the  shares  of  stock  until 
the  next  distribution  of  profits  and  losses.  In  determining 
such  withdrawal  value,  they  shall  allow  to  all  shares  of  stock 
over  two  years  of  age,  in  addition  to  the  dues  paid  thereon, 
less  any  fines  unpaid,  seventy  per  cent  of  the  profits  which 
have  accrued  and  been  added  to  the  value  of  the  shares,  and 
as  much  more  as  to  them  shall  seem  wise.  They  shall  have 
discretionary  power  to  make  the  percentage  of  profits  with- 
drawn uniform  upon  all  such  shares,  or  increase  the  same 
as  the  shares  increase  in  age.  In  the  case  of  shares  not  over 
two  years  of  age  at  the  time  of  determining  the  withdrawal 
value,  they  shall  allow,  in  lieu  of  a  percentage  of  profits,  in- 
terest upon  the  dues  paid  in  at  a  rate  of  not  less  than  four 
per  cent  per  annum.  Upon  all  withdrawals  made  until  the 
next  distribution  of  profits  and  losses,  in  addition  to  such 
withdrawal  value,  interest  shall  be  paid  upon  such  withdrawal 
value  of  the  shares,  and  upon  all  dues  paid  subsequent  to 
such  declaration  of  withdrawal  values,  together  with  such 
dues,  at  the  rate  of  four  per  cent  per  annum. 

These  sections  assume  the  matured  value  of  shares 
to  be  $200,  and  monthly  dues  $1.  If  the  matured 
value  is  placed  at  a  less  sum,  and  dues  at  $1  a  month, 
or  twenty-five  cents  a  week,  the  times  specified,  the 
sections  should  be  shortened  to  correspond. 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851. 


ARTICLE  TEN. 

THE  DIVISION  TO  BE  MADE  IN  THE  APPLICATION  OP  THE 
FUNDS  OF   THE   ASSOCIATION. 

SECTION  1.  The  division  of  the  moneys  received  by  the 
association  between  the  borrowers,  withdrawing  shareholders, 
and  matured  stock,  shall  be  made  as  follows  :  When  the 
association  shall  not  have  outstanding  any  matured  stock, 
one  half  of  the  receipts  from  dues,  interest,  and  fines  at  every 
stated  meeting  shall  be  offered  to  borrowers,  and  withdraw- 
ing shareholders  shall  be  entitled  to  the  other  half.  In  the 
event  notices  of  withdrawals  have  not  been  filed  sufficient  to 
take  said  one  half,  the  remainder  thereof  shall  be  also  offered 
to  borrowers.  In  case  there  should  not  be  borrowers,  and 
there  should  be  a  demand  for  more  than  one  half  by  with- 
drawing stockholders,  any  sum  remaining,  after  meeting  the 
demands  of  borrowers,  may  be  applied  to  withdrawals.  And 
in  the  event  of  the  association  having  matured  stock  unpaid, 
then  one  third  shall  be  applicable  to  matured  stock,  one  third 
to  borrowers,  and  one  third  to  withdrawals.  In  case  there 
shall  not  be  demand  by  borrowers  for  the  one  third  set  aside 
for  them,  the  same  shall  be  applied  to  the  payment  of  ma- 
tured stock,  or  such  balance  as  remains  after  the  applications 
of  borrowers  have  been  filled.  Any  moneys  received  by  the 
association  from  the  repayment  of  the  principal  of  a  loan 
shall  be  added  to  the  share  set  aside  for  borrowers,  if  there 
be  demand  for  the  same.  If  not,  they  shall  be  applied  in  the 
same  manner  as  provided  above  for  dues,  interest,  and  fines. 
If  at  any  time  there  shall  be  an  accumulation  of  the  funds  in 
the  treasury  of  the  association  for  which  there  is  no  demand 
by  borrowers,  matured  stock,  or  withdrawals,  and  no  pros- 
pect of  a  demand  in  the  immediate  future,  the  board  of  di- 
rectors may,  in  their  discretion,  under  rules  made  by  them, 
compel  the  withdrawal  of  free  shares  in  any  series  at  any  time 
after  four  years  from  the  date  of  their  issue,  provided  that 
the  shareholders  whose  shares  are  to  be  thus  withdrawn  com- 


172  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

pulsorily  shall  be  determined  by  lot,  and  that  they  shall  be 
paid  all  dues  paid  thereon  and  all  profits  which  have  been 
added  to  their  shares,  less  any  fines  and  proportionate  part 
of  any  loss  sustained  since  the  last  distribution.  Whenever 
a  series  of  stock  shall  mature,  the  holders  thereof  shall  re- 
spectively file  with  the  secretary  a  notice  asking  for  the  pay- 
ment of  the  same,  and  specifying  the  amount  due,  and  such 
stock  shall  be  paid  in  the  order  of  the  priority  of  the  filing 
of  such  notices. 

The  foregoing  article  is  intended  to  relieve  all  con- 
flict that  might  arise  between  the  three  classes  of  per- 
sons, viz.,  holders  of  matured  stock,  borrowers,  and 
stockholders  desiring  to  withdraw,  in  relation  to  the 
application  of  the  funds  of  the  association.  It  also 
provides  a  regulation  for  the  payment  of  matured 
stock.  The  stockholder,  during  the  years  that  his 
stock  is  maturing,  understands  that  at  its  maturity  he 
can  not  receive  his  money,  except  as  there  are  funds 
applicable  to  the  payment  of  matured  stock,  and  hence 
he  will  not  be  disappointed  if  his  stock  is  not  paid  at 
once  upon  its  arriving  at  maturity.  The  provision 
with  reference  to  compelling  withdrawals  provides  a 
safeguard  against  an  accumulation  of  funds  in  the 
association  which  shall  remain  uninvested.  An  occa- 
sion will  seldom  arise  for  using  this  provision  in  the 
articles,  but  it  is  wise  for  such  power  to  be  given  to 
the  board  of  directors. 

ARTICLE  ELEVEN. 

Compensation  of  Officers. 

SECTION  1.  No  officer  of  this  association  shall  receive 
compensation  for  services  rendered,  except  the  attorney,  as 
before  provided,  and  the  treasurer  and  the  secretary,  unless 
the  stockholders  of  the  association,  at  an  annual  meeting,  or 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.   173 

a  special  meeting,  shall  authorize  the  payment  of  such  com- 
pensation, and  fix  the  amount  thereof.  The  board  of  di- 
rectors shall  annually  determine  the  compensation  to  be  paid 
the  secretary  and  the  treasurer. 

In  nearly  all  associations  of  this  character  the  only 
officers  who  receive  compensation  are  the  secretary  and 
the  treasurer,  and  the  salaries  paid  to  them  are  not 
large  for  the  amount  of  services  performed.  Some 
associations  allow  compensation  for  president;  some 
also  provide  for  the  payment  of  compensation  to  the 
committee  which  passes  upon  the  sufficiency  of  loans, 
and  charge  the  amount  thereof  to  the  borrowers.  This 
section  may  be  amended,  as  given  above,  to  suit  the 
incorporators  of  the  association  in  that  particular. 

Incurring  of  Expenses. 

SECTION  2.  No  officer  of  the  association  shall  make  or 
incur  any  expenses  on  behalf  of  the  association  unless  duly 
authorized  so  to  do  by  the  board  of  directors. 

By-Laws. 

SECTION  3.  The  board  of  directors  may  enact  by-laws  for 
conducting  the  business  of  the  association  not  in  conflict  with 
these  articles  of  association  or  the  laws  of  the  State. 

ARTICLE  TWELVE. 

AMENDMENTS   TO   THESE   ARTICLES   OF  ASSOCIATION. 

SECTION  1.  These  articles  of  association  may  be  amended 
at  any  annual  meeting  of  the  stockholders,  or  at  any  special 
meeting  called  for  that  purpose,  by  a  two-thirds  vote  of  the 
stock  represented  at  such  meeting  ;  or  they  may  be  amended 
by  a  majority  vote,  provided  the  proposed  amendments  have 
been  duly  mailed  to  each  stockholder  one  month  preceding 
such  meeting. 


174  CO-OrERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

If  the  system  adopted  by  the  association  is  one 
vote  for  a  stockholder,  then  the  above  section  should 
read  "  stockholders "  instead  of  "  the  stock  repre- 
sented." 

It  is  impossible  to  frame  articles  of  association  that 
will  answer  the  purpose  of  all  associations  that  may 
be  formed  under  the  act  of  1851 ;  but,  in  framing  the 
foregoing,  we  have  attempted  to  adapt  them  to  all  the 
ordinary  schemes  upon  which  the  true  building  and 
loan  association  may  be  conducted.  We  have  no  doubt 
that  imperfections  may  be  found  in  them,  but  we  be- 
lieve they  will  furnish  a  safe  guide  to  all  incorporators 
of  associations  of  this  class  not  only  in  the  State  of 
New  York,  but  in  every  State  in  the  Union,  except 
as  the  powers  of  the  corporation  may  be  limited 
by  the  general  act  for  the  incorporation  of  this  class 
of  associations  in  the  respective  States,  and  that 
the  changes  to  be  made  in  them  to  adapt  them  to 
the  laws  of  any  State  in  the  Union  will  be  very  few 
indeed. 

Signing  the  Articles  of  Association. 

After  the  articles  of  association  have  been  adopted, 
they  should  be  subscribed  by  all  who  have  united  in 
the  formation  of  the  society.  In  cases  where  a  com- 
pleted draft  or  printed  copy  of  such  articles  of  associ- 
ation have  been  presented  to  the  meeting  and  have 
been  adopted  without  material  changes,  such  signing 
may  be  proceeded  with  at  once ;  but  in  case  changes 
have  been  made  which  will  require  a  new  copy  to  be 
made  before  they  are  in  clean  shape  for  signing,  an 
adjournment  of  the  meeting  will  be  had  to  some  fut- 
ure time  to  allow  such  draft  to  be  prepared.  Where 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.   175 

an  adjournment  is  had  for  the  reason  above  stated,  or 
for  any  other  reason,  two  courses  may  be  pursued. 
One  is  to  have  the  articles  of  association  ingrossed  in 
a  book  which  shall  be  known  as  the  "  Articles  of  Asso- 
ciation Book,"  and  at  the  adjourned  meeting  those 
who  have  united  in  forming  the  association  can 
subscribe  the  articles  of  association  in  the  book ;  and 
all  other  persons  thereafter  uniting  with  the  associa- 
tion subscribe  the  same  in  the  same  book.  All,  in 
addition  to  their  names,  should  give  their  post-office 
addresses. 

The  other  course  that  may  be  pursued  is  to  have 
the  articles  of  association  printed  in  form  for  distri- 
bution among  the  members,  and  to  be  bound  in  the 
pass-books  which  will  be  issued  to  each  member 
when  he  commences  paying  dues  upon  his  stock. 
This  course  will  allow  the  printed  copy  to  be  pasted 
in  the  book  for  members  to  subscribe  instead  of 
the  written  copy.  It  will  also  provide  for  the  copy 
which  is  to  be  filed  in  the  county  clerk's  office  as 
hereafter  described. 

Election  of  Officers. 

In  the  event  the  articles  of  association  adopted  are 
in  such  condition  that  they  may  be  subscribed  at  once, 
the  election  of  officers  should  be  proceeded  with.  If, 
however,  the  meeting  adjourns  to  allow  the  articles  of 
association  to  be  ingrossed  or  to  be  printed,  the  elec- 
tion of  officers  should  be  delayed  until  the  adjourned 
meeting.  At  such  other  time  as  they  are  elected,  the 
proceedings  for  their  election  will  be  controlled  by  the 
provisions  adopted  in  the  articles  of  association  except 
in  the  following  particular  :  If  the  articles  of  associ- 


176  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

ation  should  provide  that  each  shareholder  shall  be  en- 
titled to  as  many  votes  as  he  holds  shares  of  stock, 
that  provision  will  not  be  applicable  at  the  first  meet- 
ing for  the  election  of  officers,  for  the  reason  that  no 
shares  of  stock  have  yet  been  issued ;  and  each  person 
uniting  in  the  formation  of  the  association,  and  who 
has  subscribed  the  articles  of  association,  will  be  sim- 
ply entitled  to  one  vote,  the  same  as  though  the  arti- 
cles of  association  provided  that  in  all  meetings  of 
the  association  each  shareholder  shall  be  entitled  to 
one  vote  regardless  of  the  number  of  shares  owned  by 
him. 

Filing  the  Articles  of  Association. 

As  we  have  already  seen  by  section  3  of  the  act 
of  1851,  a  copy  of  the  articles  of  association,  signed  by 
the  officers  of  the  association,  together  with  a  state- 
ment showing  when  the  association  was  formed ;  the 
place  of  the  transaction  of  its  business,  and  the  names 
of  its  officers  and  directors  at  the  time  of  making  said 
statement,  duly  verified,  must  be  filed  in  the  office  of 
the  clerk  of  the  county  where  the  association  is  to 
transact  its  business.  The  following  is  the  proper 
form  for  such  statement : 

To  all  whom  it  may  concern: 

We,  the  undersigned,  do  hereby  state  and  certify  that  the 
foregoing  is  a  true  copy  of  the  articles  of  association  adopted 

by  the association  of  the of  the  State  of  New 

York.     That  such  association  was  organized  and  such  articles 

of  association  adopted  on  the day  of ,  18. .    That 

the  place  where  said association  will  conduct  its  busi- 
ness is  the in  the  county  of ,  in  the  State  of  New 

York.     That  the  following  are  the  names  of  the  officers  and 


ORGANIZING  UNDER  NEW  YORK  ACT  OF  1851.   177 

directors  or  trustees  of  the  said  association  at  this  time,  to 

wit :  ,  President ;   ,  Vice-President ; 

,  Treasurer  ;   ,  Secretary. 


directors  or  trustees. 

This  statement  should  immediately  follow  the  copy 
of  the  articles  of  association,  and  should  be  signed  by 
each  of  the  officers  with  their  official  titles.  Im- 
mediately following  the  same  should  be  an  affidavit 
made  by  the  president,  or  any  other  officer,  as  follows : 

State  of  New  York,  ) 

County  of ,  j  * 

,  President  of  the    Association  of  the 

county  of    ,  in  the  State  of  New  York,  being  duly 

sworn,  says  that  he  is  the  President  of  the Associa- 
tion of  the  county  of ,  in  the  State  of  New  York  ; 

that  the  foregoing  is  a  true  copy  of  the  articles  of  associa- 
tion of  said  association,  and  that  the  foregoing  statement,  in 
all  respects,  correctly  states  the  date  of  the  organization  of 
the  said  association,  the  place  where  the  business  thereof  is 
to  be  transacted,  and  the  names  of  the  officers,  directors,  or 
trustees  thereof  at  this  date,  and  that  the  names  of  the  officers 
and  trustees  above  signed  to  said  copy  of  the  articles  of  asso- 
ciation and  the  statement  of  facts  immediately  following  the 
same  are  the  officers  and  directors  or  trustees  of  said  associa- 
tion at  this  time,  and  that  such  statement  is  made  and  signed 
as  above,  in  conformity  to  section  3  of  the  act  of  1851,  in 
Chapter  122,  entitled  "  An  act  for  the  incorporation  of  Build- 
ing, Mutual  Loan,  and  Accumulating  Fund  Associations,"  for 
the  purpose  of  effecting  the  incorporation  of  such  association 

as  by  said  section  provided.     Sworn  to  before  me  this 

day  of ,  188.. 


1Y8  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

When  the  instrument  is  completed  it  will  contain, 
first,  a  true  copy  of  the  articles  of  association ;  next, 
the  statement  when  the  association  was  organized,  the 
place  where  its  business  is  to  be  transacted,  and  the 
names  of  its  officers  and  directors  or  trustees ;  next, 
the  signatures  of  the  officers  of  the  association ;  and 
lastly,  the  affidavit. 

The  copy  used  for  making  this  instrument  for  fil- 
ing may  be  a  printed  copy,  in  case  the  articles  of 
association  are  printed.  When  completed,  the  same 
should  be  filed  in  the  county  clerk's  office,  where  the 
association  is  located.  With  the  filing  of  this  instru- 
ment, the  incorporation  is  completed. 


CHAPTER  IX. 

HOW  TO   KEEP  ACCOUNTS. 

THE  keeping  of  accounts  seems  a  very  simple  mat- 
ter when  an  association  is  first  organized ;  but  after  a 
few  years'  experience  many  vexatious  difficulties  will 
be  met  unless  a  proper  system  is  adopted  at  the  begin- 
ning. Begin  right  and  the  future  is  easy;  start 
wrong,  and  the  success  of  the  association  may  be  en- 
dangered. Under  a  wrong  system  there  may  appear 
to  be  a  greater  surplus  to  be  distributed  than  in  fact 
exists.  Many  associations  in  the  past,  working  under 
the  gross  system  with  a  system  of  rebates  on  the  re- 
payment of  loans,  have  fallen  into  the  error  of  treating 
as  assets  the  face  value  of  all  securities  held,  without 
deducting  the  premium  bid  on  the  loan  that  would  be 
deducted  from  the  face  value  in  case  of  repayment  of 
the  loan. 

The  system  adopted  should  be  as  simple  as  possible 
and  secure  accuracy ;  but  it  will  be  found  quite  impos- 
sible to  secure  the  desired  accuracy  unless  the  system 
involves  double  entry.  There  can  be  no  excellence 
without  labor.  A  set  of  account-books  that  will  reveal 
at  all  times  with  unerring  accuracy  the  actual  condi- 
tion of  the  association,  is  a  source  of  pride  to  the 
secretary  who  has  kept  them,  and  inspires  conn- 


180  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

dence  in  the  shareholders  in  the  wisdom  of  the  man- 
agement. 

We  can  not  enter  upon  an  extended  discussion  of 
book-keeping,  but  the  purpose  we  have  in  view  in  this 
work  would  be  incomplete  if  we  did  not  outline  a  suit- 
able system  of  book-keeping.  The  system  given  in 
this  chapter  has  been  in  actual  operation  for  many 
years  in  one  of  the  most  successful  associations  in  this 
country.  The  able  secretary,  James  N.  Ward,  Esq.,  of 
Elmira,  New  York,  a  lawyer  as  well  as  an  expert  ac- 
countant, has  written  out  for  us  the  system  in  use  by 
him,  many  features  of  which  have  been  of  his  own 
origination,  and  whatever  merit  this  system  contains 
is  due  largely  to  him.  We  fully  approve  of  it  and 
assert  that  any  secretary  who  adopts  it  will  sooner  or 
later  thank  us  for  outlining  the  system  for  him. 

The  outline  given  assumes  the  matured  value  of  a 
share  at  $200 ;  monthly  dues  of  one  dollar ;  interest 
at  6  per  cent  per  annum ;  fines  for  default  of  payment 
of  dues  and  interest,  10  per  cent  of  amount  defaulted 
each  month ;  entrance  fee  twenty-five  cents  per  share ; 
transfer  fee  ten  cents  a  share ;  stock  issued  in  series. 
The  plan  of  book-keeping  given  can  be  readily  modi- 
fied as  to  details,  so  as  to  adapt  it  to  any  changes 
from  the  typical  scheme  adopted.  The  remainder 
of  this  chapter  is  substantially  in  the  language  of 
Mr.  Ward. 

A  treatise  on  book-keeping  is  not  within  the  pur- 
view of  a  work  of  this  kind ;  but  for  the  assistance  of 
the  new  secretary  and  treasurer,  forms  are  here  given 
which  have  been  used  for  several  years  by  the  Che- 
mung  Valley  Mutual  Loan  Association,  of  Elmira, 
New  York,  and  have  been  fully  proved  by  experience. 


HOW   TO  KEEP  ACCOUNTS.  Igl 

Specimen  entries  for  each  book  are  given  in  the  forms. 
To  keep  a  ledger-account  with  every  member  of  an 
association,  such  as  would  show  in  dollars  and  cents  the 
amount  of  dues  paid  by  him  and  the  dividends  on  his 
shares,  would  involve  a  vast  amount  of  labor  and  con- 
sequent expense.  The  same  information  can  be  other- 
wise obtained  with  equal  accuracy  and  much  less  labor 
and  expense.  Every  share  of  stock  is  of  precisely  the 
same  value  in  the  same  series.  The  main  set  of  books 
will  show  the  value  of  one  share  in  each  series ;  there- 
fore, an  auxiliary  set  of  stock-books  showing  the  series 
in  which,  and  the  number  of  shares  in  a  series  held  by 
each  member,  gives  all  the  necessary  data  with  which 
to  find  the  value  of  the  shares  of  each  individual 
member. 

The  simple  multiplication  of  the  value  of  one  share 
by  the  number  of  shares  in  the  series  held  by  the  indi- 
vidual member  gives  the  desired  information. 

The  secretary's  main  set  of  books  consist  of  a  dues, 
interest,  and  fines  book ;  cash-received  book ;  journal 
day-book ;  ledger  and  transfer  book. 

The  secretary's  auxiliary  books  consist  of  a  stock 
journal  day-book ;  stock  ledger,  with  index  giving  the 
address  of  each  member ;  stock  trial-balance  book ;  se- 
curity register ;  and  book  containing  by-laws,  to  be  sub- 
scribed by  members  on  joining  the  association ;  index 
and  trial-balance  book  for  main  ledger ;  and  inventory 
book. 

For  the  purpose  of  these  forms,  it  will  be  assumed 
that  dues  and  interest  are  to  be  paid  monthly.  In 
associations  where  payments  are  to  be  made  weekly  or 
otherwise,  the  necessary  modifications  of  the  forms 
here  given  can  readily  be  made.  Notwithstanding  the 


182  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 


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HOW  TO  KEEP  ACCOUNTS.  183 

first  act  of  a  new  association  after  it  is  organized  is  to 
receive  members  and  issue  certificates  of  stock,  yet  it 
would  seem  that  the  most  logical  order  in  which  to 
consider  the  books  is  to  begin  with  the  dues,  interest, 
and  fines  book.  This  book  is  really  a  blotter  for  the 
main  set  of  books,  as  will  appear  from  examination  of 
the  accompanying  form. 

The  foregoing  is  the  "  W  "  page  of  the  dues,  interest, 
and  fines  book,  and  gives  all  of  the  various  entries 
which  can  properly  come  upon  that  book.  The  en- 
tries in  this  book  are  made  by  the  secretary  at  the 
meeting  as  he  stands  beside  the  treasurer  or  member 
of  committee  when  the  money  is  paid  in.  The  treas- 
urer or  other  officer  receives  the  money,  announces  the 
name  of  the  member  paying  and  the  sum  paid,  and 
the  secretary  puts  it  down.  The  book  contains  a  page 
or  more  for  each  letter  of  the  alphabet,  and  is  cut  in 
at  the  margin  and  lettered  like  an  index.  The  col- 
umns are  so  headed  as  to  explain  themselves,  unless  it 
be  the  left-hand  columns.  The  column  headed 
"  Shares  "  contains  the  number  of  shares  of  non-ma- 
tured stock  which  each  member  holds  set  opposite  to 
the  respective  members'  names. 

The  column  headed  "Int."  gives  the  number  of 
shares  borrowed  on,  and,  where  the  stock  and  interest 
and  payments  conform  to  the  plan  announced  in  the 
preceding  remarks,  the  sum  of  the  shares  held  and 
shares  borrowed  on,  gives  the  sum  in  dollars  which  is 
to  be  paid  monthly  by  the  shareholder.  It  will  be 
found  convenient  to  minute  under  the  month  in  which 
it  occurs  any  change  in  the  status  of  a  member's 
shares.  For  example,  in  the  beginning  of  the  fiscal 
year  "  April "  Samuel  Wheeler  has  ten  shares  of  stock, 


184:  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

and  has  borrowed  on  five  of  them.  This  is  shown  in 
the  April  "due"  column  "  6/{5";  in  July  he  paid 
his  loan  which  is  minuted  "  Pd.  L."  Lucy  Williams 
has  ten  shares ;  in  June  she  borrows  on  ten  shares ; 

this  is  shown  by  the  entry  "  l°LQ"    In  April  Joseph 

Wrigley  paid  five  months'  dues — four  months'  in  ad- 
vance. This  is  shown  by  the  entry  "  Pd.  April "  in 
the  "due"  columns  of  the  four  subsequent  months. 
This  form,  when  preparing  such  a  book  or  blotter, 
should  be  enlarged  so  as  to  include  the  twelve  months 
of  a  fiscal  year,  if  series  are  issued  yearly. 

These  memoranda  are  useful  only  in  checking  for 
errors  and  to  prove  accuracy. 

The  next  book  in  rotation  is  shown  by  the  follow- 
ing form,  and  may  be  properly  styled  the  cash-received 
book. 

The  entries  in  the  cash- received  book  are  made 
from  the  dues,  interest,  and  fines  book,  and  also  from 
the  memorandum  made  by  the  secretary  at  the  meet- 
ing of  other  payments  received  which  do  not  properly 
belong  in  that  book. 

For  the  purpose  of  illustrating  more  fully,  the 
July  column  of  the  dues,  interest,  and  fines  book,  or 
blotter,  before  given,  is  carried  into  this  book.  By  a 
comparison  of  the  entries  of  the  forms  of  the  two 
books,  the  uses  and  purposes  of  the  cash-received 
book  will  be  apparent.  The  first  money  column 
shows  the  amount  of  dues  paid,  the  second  the  amount 
of  interest  paid,  the  third  the  amount  of  fines  paid, 
the  fourth  the  amount  of  entrance  fees  paid  (this  col- 
umn is  used  only  when  new  shares  have  been  issued 
to  a  member),  and  the  fifth  money  column  gives  the 


TO   KEEP   ACCOUNTS. 


185 


CASH-RECEIVED  BOOK. 
Cash  received  July  28,  1888. 

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186  CO-OrERATIVE   SAVINGS  AND   LOAN  ASSOCIATIONS. 

total  payment  and  is  the  sum  of  the  entries  in  all  of 
the  other  columns.  The  sum  set  down  in  the  "  total " 
column  is  also  the  same  sum  that  is  set  down  in  the 
"  paid  "  column  of  the  same  month  of  the  dues,  inter- 
est, and  fines  book  opposite  the  name  of  the  member. 
The  totals  of  the  first,  second,  third,  and  fourth  columns 
added  together  must  agree  with  the  footing  of  the 
fifth  or  "  total "  column.  After  making  and  compar- 
ing the  footings  of  the  columns  as  shown  in  the  form, 
the  entries  are  made  of  the  items  on  the  memorandum 
before  mentioned  made  by  the  secretary  at  the  meet-" 
ing.  Eeferring  to  the  preceding  form,  the  first  entry 
after  the  recapitulation  shows  that  Samuel  Wheeler, 
in  addition  to  paying  his  dues  and  interest,  paid 
$1,000,  the  amount  of  his  loan.  The  next  entry 
shows  that  John  D.  Williams,  in  addition  to  paying 
his  dues  and  interest,  paid  $50  on  account,  to  be  accu- 
mulated with  like  payments,  until  combined,  they 
will  equal  and  cancel  $200  (one  share)  of  his  loan, 
and  thereby  reduce  his  interest  payment  one  dollar 
per  month. 

If  the  posting  to  the  ledger  is  done  directly  from 
the  cash-received  book,  without  the  intervention  of  the 
journal,  "  DUES  "  account  is  credited  with  the  monthly 
total  of  the  "  dues  "  column,  "  INTEREST  "  account  is 
credited  with  the  monthly  total  of  the  "  interest "  col- 
umn, "  FINES  "  account  is  credited  with  the  monthly  to- 
tal of  the  "fines"  column,  "ENTRANCE  FEES"  account 
is  credited  with  the  monthly  total  of  the  "  entrance 
fees  "  column,  "  LOANS  "  account  is  credited  with  the 
monthly  total  of  the  loans  repaid,  any  member  is  cred- 
ited with  the  excess  of  his  payment  over  the  amount 
due  from  him  for  dues,  interest  and  fines  (no  account 


HOW  TO   KEEP  ACCOUNTS.  187 

is  kept  on  the  general  ledger  with  members  to  show 
the  amount  of  dues,  interest,  fines,  or  entrance  fees 
paid),  and  the  "TREASURER'S"  account  is  charged  with 
the  sum  total  of  the  credits  enumerated.  In  the  event 
the  scheme  of  the  association  as  to  premiums  is  the 
installment  plan,  there  should  be  an  additional  col- 
umn for  premium  paid.  Under  the  gross  plan,  the 
premiums  are  paid  in  fact  at  the  time  the  loan  is  per- 
fected and  the  order  given,  the  amount  of  the  premium 
being  deducted  from  the  face  of  the  loan.  The  entry 
for  the  premium  may  then  be  made  in  the  journal 
day-book,  according  to  the  entry  of  the  loan  to  John 
D.  Williams,  as  shown  in  the  third  entry  of  the  form 
of  that  book  following. 

The  journal  day-book  is  the  next  in  order,  and  its 
form  and  use  are  familiar  to  all  double-entry  book- 
keepers. It  is  given  here,  however,  perhaps  unneces- 
sarily, for  the  double  purpose  of  making  a  complete 
and  continuous  set  of  forms,  and  to  give  a  com- 
plete sample  of  the  entries  in  loan  association  book- 
keeping. 

Explanations  so  far  as  necessary  will  be  placed 
under  the  entry  in  foot  notes. 


188  CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONS. 


JOURNAL  DAY-BOOK. 

Elraira,  N.  Y.,  April  3,  1883. 


The  Elraira  Mutual  Loan  Association, 
a  corporation  duly  organized  under 
and  by  virtue  of  the  laws  of  the 
State  of  New  York  on  the  third  day 
of  April,  1883,  with  an  authorized 
capital  of  not  to  exceed  10,000  shares, 
of  the  par  value  of  $200  per  share, 
outstanding  at  any  one  time,  is  now 
ready  to  begin  business.  Assets 
nothing.  Liabilities  for  expenses  of 
incorporation  not  yet  audited. 


*rfV« 

TREASURER,  To  SUNDRIES,* 

Receipts  of  1st  meeting  for  receiving 

dues  : 

To  DUES  on  1,000  shares  issued, 
To  ENTRANCE  FEES  on   1,000   shares 

issued, 

24. 

EXPENSE,  To  TREASURER, 

Drew  orders  on  the  Treasurer  for  ex- 

penses of  incorporation,  as  follows  : 
No.  1.  J.  N.Ward  for  att'y'a  fees,  $40 
No.  2.  "Advertiser,"  association 

notices,  5 

No.  3.  "Evening  Star,"  associa- 

tion notices,  5 


50 


27. 


LOANS,  To  SUNDRIES, 

Loaned  to  John  D.  Williams  on  his 

bond  and  mortgage  of  city  property, 

6  shares  at  $10  per  share  premium, 

To  PREMIUM,  on  6  shares  at  $10, 

To  TREASURER,  Order  No.  4,  drawn 

favor  of  John  D.  Williams  for  loan, 

28. 

FURNITURE  and  FIXTURES, 

To  TREASURER, 

Drew  order  favor  of  H.  S.  Gilbert  & 
Co.  for  fire-proof  safe. 


$1,250 


50 


1,200 


60 


$1,000 
250 

50 


1,140 


60 


*  This  entry  is  taken  from  and  might  be  posted  directly  from  the 
cash-received  book,  and  omitted  from  this  book  entirely.  The  Dues 
a/c  might  also  be  omitted,  and  use  the  Capital  Stock  «/c. 


HOW   TO  KEEP  ACCOUNTS. 


189 


EInrira,  N.  Y.,  November  24,  1885. 


SUNDRIES,                      To  SUNDRIES,*, 
J.  N.  Ward  has  withdrawn  5  shares 

series  No.  1  Capital  Stock,  on  whichj 

he  has  paid  dues  to  and  including 

the  November  meeting  : 

CAPITAL  STOCK,  1st  series,  5  shares  at 

$53.32, 

266 

GO 

DUES,  April  to  November  meeting,  8( 

months  at  $5, 

40 

INTEREST,  April  to  November  meeting, 
on  5  shares  at  $1.48, 

7 

40 

To  Loss  and  GAIN,  Profits  retained  on 

1st  series,  5  shares  at  $0.63, 

3 

15 

To  TREASURER,  Order  No.  694,  favor 

of  J.  N.  Ward, 

810 

85 

February  14,  1886. 

SUNDRIES,                        To  SUNDRIES, 

The  attorney  of  the  association  has 

this  day  paid  over  to  the  Treasurer 

the  proceeds  of  thfc  foreclosure  of 

Richard  Roe  mortgage 

The  decree  of  foreclosure  cancels  10 

shares  2d  series  of  stock,  pledged  by 

R.  Roe  to  secure  the  loan,  and  ap- 

plies the  withdrawal  value  on  Dec. 

29,  1885,  of  said  shares  thereon. 

Withdrawal   value,    Dec.    29, 

1885,  of  2d  series,  10  shares, 

at  $35.34,                                 $353  40 

Less  arrears  of  dues,       $70  00 

Less  fines  on  arrears  of 

dues,                              24  86 

Withdrawal  value  of  said 

shares  as  applied,                   $258  54 
CAPITAL  STOCK,  2d  series,  10  shares  at 

$25.61, 

256 

10 

DUES,  2  mos.  paid  in  current  year  on 

10  shares  of  stock,  at  $2, 

20 

TREASURER,  Amount  paid  to  him  by 

attorney, 

1,853 

92 

To  LOANS,  10  shares  loan  to  R.  Roe, 

foreclosed, 

2,000 

To  INTEREST,  On  loan  and  on  judgment, 
To  FINES,  On  arrears  of  dues  as 

78 

70 

above,                       $24  86 

On  arrears  of  interest,  24  86 

49 

72 

To  Loss  and  GAIN,  Profits  retained  on 

canceled  stock,  2d  series,  10  shares, 

at  $0.16, 

1 

00 

*  In  case  of  withdrawal  of  stock,  debit  Capital  Stock  a/c  with  the 
holding  value  of  the  shares  at  the  last  annual  meeting,  and  debit  Dues 
account  with  the  dues  paid  thereon  during  the  current  year,  and  credit 
Loss  and  Gain  with  the  profits  retained. 


190  CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONS. 


Elmira,  N.  Y.,  February  14,  1886. 


SUNDRIES,  To  SUNDRIES, 

The  attorney  of  the  association  re- 
ports the  completion  of  the  foreclos- 
ure of  the  mortgage  to  the  associa- 
tion made  by  John  Smith,  and  that 
on  the  3d  day  of  February,  1886,  he 
bid  off  on  behalf  of  the  association 
the  mortgaged  property  at  $1,800, 
and  that  a  judgment  for  deficiency 
of  $334.82  lias  been  entered  in  favor 
of  the  association  against  John 
Smith.  The  decree  of  foreclosure 
cancels  10  shares  3d  series  stock, 
pledged  by  John  Smith  to  secure 
the  loan,  and  applies  the  withdrawal 
value  on  Dec.  29, 1885,  of  said  shares 
thereon. 

Withdrawal  value  on  Dec.  29, 
1885,  of  3d  series,  10  shares, 
at  $21.86,  $218  60 

Less  arrears  of  dues, 
7  mos.,  at  $10,  $70  00 

Less  fines  on  arrears 
of  dues,  24  86 

94  86 

Withdrawal  value  of  said 
shares  as  applied,  $123  74 

The  attorney's  bill  of  costs  and  ex- 
penses of  the  foreclosure  is  audited, 
and  ordered  paid,  at  $150. 

CAPITAL  STOCK,  3d  series,  10  shares, 
at  $12.40, 

DUES,  2  months  paid  in  current  year 
on  10  shares  of  stock  at  $2  per 
share, 

REAL  ESTATE,  Smith  property  bid  off 
at 

JUDGMENTS  RECEIVABLE,  For  defi- 
ciency, 

To  LOANS,  10  shares  loan  to  J.  Smith, 
foreclosed, 

To  INTEREST,  On  loan  and  judgment, 

To  FINES,  On  arrears  of  dues 

as  above,  $24  86 

On  arrears  of  inter- 
est, 24  86 

To  Loss  and  GAIN,  Profits  retained  on 
canceled  stock  3d  series,  10  shares 
at  $0.04, 

To  TREASURER,  Drew  Order  No.  701, 
favor  J.  N.  Ward,  for  att'y's  bill  as 
audited  as  above, 


124 


1,800 
33482 


2,000 
7870 


4972 
40 
150 


HOW  TO  KEEP  ACCOUNTS. 


191 


Elmira,  K  Y.,  April  16,  1888. 


The  Elinira  Mutual  Loan  Association, 
having  reached  the  close  of  its  fifth 
fiscal  year,  the  following  entries  are 
made  for  the  purpose  of  closing  the 
books  preparatory   to  making  the 
annual  report  and  statement  of  its 
condition. 
BALANCE,                      To  SUNDRIES,* 
Accrued  dues,  interest,  and  fines  un- 
paid at  this  date,  as  follows  : 
Name.         Dues.      Int.       Fines. 
W.  V.  Calkins,  $10           
C.  W.  Holmes,     10        $10        $1  00 
H.  S.  Hudson,      10                           60 
$30        $10        $1  50 

To  DUES,   Accrued   and   unpaid   as 
above, 
To  INTEREST,  Accrued  and  unpaid,  as 
above, 
To  FINES,  Accrued  and  unpaid,  as 
above, 

41 

85 
25 

1,308 

50 

80 
10 
1 
60 

1,308 

50 

SUNDRIES,                       To  BALANCED 
Dues  and  interest  paid  in  advance  as 
follows  : 
Name.                 Dues.        Interest. 
W.  B.  Coffin,              $5 
J.  E.  Dohoney,           10               $5 
G.  D.  Parsons,           20               20 
$35              $25 

DUES,  Paid  in  advance,  as  above, 
INTEREST,  Paid  in  advance,  as  above, 

BALANCE, 
To  INTEREST, 
Interest   accrued  on    loans   of   1,308 
shares  outstanding  payable  at  April 
meeting.  % 

*  The  items  for  this  entry  are  obtained  from  the  dues,  interest,  and 
fines  book,  by  running  through  and  finding  those  in  arrears,  and  how 
much. 

t  The  items  for  this  entry  are  obtained  from  the  dues,  interest,  and 
fines  book  by  running  through  the  book  and  finding  those  who  have 
paid  an  even  number  of  months  in  advance,  and  been  marked  paid. 
The  page  of  dues,  interest,  and  fines  book  heretofore  given  has  an  ex- 
ample in  the  entries  following  the  name  of  Joseph  Wrigley. 

J  This  interest,  it  is  evident,  belongs  to  the  profits  of  this  year's 
business,  although  it  is  not  payable  until  the  first  meeting  of  the  next 
year. 


192  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 


Elmira,  N.  Y.,  April  16,  1888. 


1 
1 

DUES, 
To  CAPITAL  STOCK, 
12  months'  dues  on  7,000  shares  of 
stock  in  all  series  now  outstanding.* 

84,000 

12,660 
412 

475 

26 
50 

50 

732 

12,825 

30 
70 

48 

84,000 
13,624 

732 
12,825 

SUNDRIES,             To  Loss  AND  GAiN,t 
INTEREST,  Net  profit  from  this  source, 
FINES,              «           "            " 
ENTRANCE  FEES,  Net  profit  from  this 
source, 
TRANSFER  FEES,  Net  profits  from  this 
source, 
PREMIUM,  Earned  during  year, 
KEAL  ESTATE,  Net  profit  from  this 
source,  including  rentals, 

Loss  AND  GAIN, 
To  EXPENSE, 
Expenses  of  conducting  the  business 
for  the  year, 

Loss  AND  GAIN, 
To  CAPITAL  STOCK,  % 
The  Board  of  Directors,  on  this  16th 
day  of  April,  1888,  declared  a  divi- 
dend on  the  capital  stock  of  6  per 
cent  ad  valorem,  as  follows  : 
Series  No.  1,   1,200  shares  at 
$3.59,                                           $4,308 
SeriesNo.2,l,300sharesat  $2.70,  3,510 
Series  No.  3,  1,400  shares  at  $1.92,  2,688 
SeriesNo.4,l,500sharesat  $1.13,  1,695 
SeriesNo.  5,  l,600sharesat$0.39,     624 

$12,825 

*  The  capital  stock  has,  or  should  have  been,  increased  during  the 
year  by  the  full  amount  of  twelve  months'  dues.  If  there  are  any  ar- 
rears, they  are  collectible  assets.  If  there  are  any  advance  payments, 
they  are  a  liability. 

t  The  items  for  this  entry  are  taken  from  the  ledger  for  all  except 
the  two  at  the  foot,  "  Premium"  and  "  Eeal  Estate,"  and,  with  those 
exceptions,  are  the  balances  of  the  several  accounts  after  posting  the 
items  from  the  dues,  interest,  and  fines  book  before  mentioned.  The 
items  of  profit  from  "  Premium  "  are  ascertained  by  deducting  from  the 
balance  of  the  ledger  account  the  amount  of  premium  which  borrowers 
would  be  entitled  to  have  returned  to  them  in  case  all  the  loans  were 
now  repaid,  the  amount  of  premium  liable  to  be  returned  to  be  ascer- 
tained from  the  record  of  each  loan  in  the  security  register,  on  the  basis 
prescribed  by  the  by-laws. 

\  This  entry  is  made  up  from  the  minutes  of  the  directors'  meeting 
at  which  the  dividend  is  declared. 


HOW  TO  KEEP  ACCOUNTS. 


193 


Elmira,  1ST.  Y.,  April  16,  1888. 


BALANCE,                        To  SUNDRIES, 

$266,477  84 

To  TREASURER,  To  close  the  account, 

843 

02 

To  LOANS,                   "           u 

261,600 

To   FURNITURE    AND    FIXTURES,    To 

close  the  account, 

150 

To  W.   H.  PETERS'  s   CONTRACT,   To 

close  the  account, 

1,750 

To  REAL  ESTATE,  To  close  the  account, 

1,800 

To  JUDGMENTS  RECEIVABLE,  To  close 

the  account, 

33482 

I 

SUNDRIES,                         To  BALANCE, 

267,767  34 

PREMIUM,  To  close  the  account, 

950 

Loss  AND  GAIN,  To  close  the  account, 

41634 

1 

CAPITAL  STOCK,           " 

265,326 

JOHN  D.  WILLIAMS,   "                " 

75 

CLAY  W.  HOLMES,      " 

1,000 

The  Elmira  Mutual  Loan  Association 

begins  its  sixth  fiscal  year  with  re- 

sources and  liabilities  as  follows: 

Resources. 
SUNDRIES,                        To  BALANCE, 

267,827 

34 

TREASURER,  Cash  in  his  hands, 

84302 

LOANS,  Secured  and  outstanding, 

261,600, 

FURNITURE  AND  FIXTURES,  As  per  in- 

| 

ventory, 

150 

W.  H.  PETERS'S  CONTRACT,  Balance 

unpaid  on  his  contractt 

1,750 

REAL  ESTATE,  As  per  inventory  or 

appraisal, 
JUDGMENTS  RECEIVABLE,  Unpaid  judg- 

1,800 

ment  due  association, 

33482 

FINES,  Accrued  and  unpaid, 

150 

DUES,         "         » 

30 

INTEREST,  "         u        " 

1,318 

Liabilities. 

BALANCE,                         To  SUNDRIES, 

267,82734 

To  DUES,  Paid  in  advance, 

35 

To  INTEREST,  Paid  in  advance. 
To  Loss  and  GAIN,  Undivided  profits 

25 

held  against  judgment  receivable 
considered  doubtful, 

416 

34 

To  JOHN  D.  WILLIAMS,  Paym't  bv  him 
toward  cancellation  of  1  share  of  loan, 

75 

To  CLAY  W.  HOLMES,  Retained  on 

loan  until  completion   of  house  on 

the  mortgaged  premises, 
To  PREMIUM,  Unearned  premiums  on 

1,000 

loans, 

950 

CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 


Elmira,  N.  Y.,  April,  16,  1888. 


1 

To  CAPITAL  STOCK, 
1st  series,    1,200    shares,    at 
$68.91,                                      $82,692 
2d    series,    1,300    shares,    at 
$53.21,                                        69,173 
3d    series,    1,400    shares,   at 
$39.53,                                          55,342 
4th    series,    1,500    shares,    at 
$25.53,                                          38,295 
5th    series,    1,600    shares,    at 
$12.39,                                        19,824 

265,326 

These  last  two  entries  seem  to  be  self-explanatory.    They  are  taken 
from  the  balance-sheet,  if  one  is  made  up,  or  from  the  ledger,  if  not. 


Dr. 


GENERAL  LEDGER. 

Capital  Stock. 


Cr. 


188S. 

1888. 

April 

16 

To  Balance, 

21 

$265,326 

April 

16 
16 
16 

By  Total  credit, 
By  Dues, 
By  Loss  and 

18 

$168,501 
84,000 

Gain, 

20 

12,825 

$265,326 

$265,826 

1888. 

April 

16 

By  balance, 

28  $265,826 

The  form  of  this  book  and  its  use  needs  no  expla- 
nation, as  it  is  familiar  to  all  book-keepers.  The  total 
credits  and  the  closing  entries  only  are  given  of  the 
Capital  Stock  account. 

Direction  for  making  or  preparing  the  Annual  Report 
or  Statement. 

To  begin  with,  an  appraisal  of  all  the  real  and  per- 
sonal property  of  the  association  should  be  made  by  a 
committee  in  the  inventory  book.  The  secretary 
should  make  a  statement  of  the  amount  of  premiums 
which  (under  the  by-laws)  would  be  returnable  if  all 


HOW  TO  KEEP  ACCOUNTS.  195 

the  loans  outstanding  should  be  repaid  at  the  next 
meeting.  Also  a  statement  of  the  arrears  of  dues, 
interest,  and  fines  separately  (see  entry  in  journal 
day-book).  Also  a  statement  of  dues  and  interest 
paid  in  advance  by  any  members  (see  entry  in  journal 
day-book).  Trial  balances  must  be  taken  to  prove 
the  correctness  of  the  main  ledger  and  stock  ledger. 
As  additional  proof  of  the  accuracy  of  the  capital 
stock  account  in  the  main  ledger,  compare  the  bal- 
ance of  the  account  with  the  holding  value  of  all  shares 
in  all  series  shown  in  the  last  report  (series  now  more 
than  one  year  old),  which  the  stock  ledger  shows  to 
be  still  outstanding.  For  example,  suppose  the  bal- 
ance of  the  capital  stock  account  in  the  main  ledger 
to  be  $168,501,  and  the  holding  value  at  the  com- 
mencement of  the  year  of  one  share  in  each  of  the 
various  series  to  be  as  follows :  1st  series,  $53.32 ; 
2d  series,  $38.51 ;  3d  series,  $25.61 ;  and  4th  series, 
$12.40,  and  the  stock  ledger  shows  now  outstanding 
as  follows : 

1st  series  1,200  shares  at  $53.32  as  above  =  $63,984 
2d     "      1,300         "         38.51  "  50,063 

8d      "      1,400         "         25.61  "  35,854 

4th    "      1,500         "          12.40          "  18,600 

And  we  have  value  of  shares  over  one  year  old  out- 
standing $168,501,  proving  that  the  capital  stock 
account  in  the  main  ledger  is  correct.  Additional 
proof  of  the  correctness  of  the  dues  account  in  the 
main  ledger  is  obtained  by  adding  to  the  balance  of 
the  account  all  the  arrears  of  dues,  and  deducting 
therefrom  the  dues  paid  in  advance,  and  comparing  the 
results  with  the  dues  for  the  period  on  all  the  shares 
of  all  series  outstanding.  For  example,  suppose  the 


196  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

main  ledger  shows  the  balance  of  the  dues  account  to 
be  $84,005,  the  arrears  of  dues  are  in  all  $30,  and 
the  dues  paid  in  advance  aggregate  $35,  we  have 
$84,005  +  $30  =  $84,035  -  $35  =  $84,000. 

Numbers  of  shares  outstanding  as  shown  by  stock 
ledger : 

1st  series 1,200  shares 

2d     "      1,300      " 

3d      "      1,400      " 

4th    "      1,500      " 

5th    "      1,600      " 

Total 7,000      "      at  $12  =  $84,000 

(twelve  months'  dues  at  one  dollar  per  month  per  share), 
which  proves  the  dues  account  to  be  correct.  Having 
thus  proved  and  cross-checked  the  books,  you  know 
they  are  correct,  and  you  can  now  proceed  to  close 
them.  The  closing  entries  are  given  in  full  in  the 
form  for  the  journal  day-book,  and  need  not  be  re- 
peated here.  The  computations  from  which  those 
entries  are  taken  will  now  be  given  in  detail.  It  will 
be  found  convenient  to  use  a  rough  balance  sheet,  on 
which  the  results  of  the  business  can  be  kept  before 
making  the  computation.  No  elaborate  ruled  sheet  is 
necessary,  and  the  whole  can  be  made  in  pencil  if  pre- 
ferred, so  long  as  the  figures  are  taken  down  accu- 
rately. 

Following  is  the  sheet  from  which  the  closing 
entries  in  the  journal  day-book  were  taken.  It  may 
as  well  be  stated  that  the  computation  of  profits  are 
made  as  of  the  date  of  the  next  meeting  for  receiving 
dues  (when  a  new  series  will  be  issued),  and  withdrawal 
values  should  bear  interest  from  that  date,  and  not  the 
date  of  the  annual  meeting : 


IIOW  TO  KEEP  ACCOUNTS. 


197 


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198  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

The  foregoing  balance-sheet  shows  that  the  net 
profits  for  the  year  were  $13,241.34,  but  for  prudent 
management  retain  an  amount  equal  to  the  amount 
of  judgment  receivable  of  doubtful  value  $334.82  as 
undivided  profits,  leaving  for  dividend  $12,906.52. 
The  capital  stock  account  shows  the  capital  as  of  the 
beginning  of  the  year  to  be  $168,501.  Dues  are  also 
capital ;  but  as  they  have  been  accumulating  during 
the  year,  it  must  be  ascertained  what  their  equivalent 
for  a  year  would  be  by  equating  the  payments,  by 
which  we  find  the  $84,000  dues  to  be  equal  to  an  in- 
vestment for  one  year  of  $45,500 ;  adding  this  to  the 
capital  stock  account,  balance  gives  capital  invested 
for  one  year  equal  to  $214,001.  Divide  the  net  prof- 
its, $12,906.52  by  $214,001,  and  we  find  the  dividend 
earned  six  per  cent  and  a  very  small  fraction.  The 
fraction  being,  so  small,  we  leave  the  sum  it  repre- 
sents to  add  to  the  undivided  profits  above  mentioned. 

It  is  necessary  to  get  the  dividend  and  holding 
value  per  share.  The  following  method  is  recom- 
mended for  its  simplicity  and  accuracy :  The  dividend 
on  one  share  of  the  last  series  issued  is  the  same  as  the 
dividend  on  the  dues  or  installments  on  one  share 
of  every  other  series  for  the  year.  Dues  paid  month- 
ly during  a  year  equal  the  investment  of  one  dollar  for 
seventy-eight*  months,  or  $6.50  for  the  twelve  months. 

*  The  dollar  paid  for  the  first  month's  dues  has  been  invested  for 
twelve  months ;  the  dollar  for  the  second  month's  dues  has  been  in- 
vested for  eleven  months ;  the  dollar  paid  for  third  month's  dues 
has  been  invested  ten  months,  and  so  on  until  the  entire  twelve 
months'  dues  are  paid  in.  The  twelfth  months'  dues  being  invested 
one  month  before  the  next  series  is  issued,  making  as  you  will  see 
by  continuing  the  illustration,  an  investment  equal  to  one  dollar 
for  seventy-eight  months. 


HOW  TO  KEEP  ACCOUNTS. 


199 


At  six  per  cent  rate  of  dividend  earned  gives  divi- 
dend thirty-nine  cents  for  the  dues  on  one  share  of  the 
last  (fifth)  series  issued  and  of  the  dues  portion  of  one 
share  of  every  other  series.  The  holding  value  of  one 
share  of  first  series  at  commencement  of  the  year  was 
$53.32  X  .06=13.20,  the  dividend,  plus  thirty-nine 
cents  dividend  on  the  dues  of  one  share  as  above 
equals  $3.59,  the  total  dividend  on  one  share  of  first 
series. 

Below  is  given  the  holding  value  of  one  share  in 
each  series,  according  to  the  above  explanation,  in  the 
form  in  which  the  computation  is  made : 


First  series. 

Second  ceries 

Third  series. 

Fourth 
series. 

Fifth 
teries. 

Holding  value  of  1  share  at 
the  beginning  of  the  year. 
Dues  paid  during  year  
Dividend  on  holding  value. 
Dividend  on  dues  paid  in 
during  the  year 

$53  82 
12  00 
3  20 

39 

$38  51 
12  00 
2  81 

89 

$25  61 
12  00 
1  58 

89 

$12  40 
12  00 
.74 

39 

$12  00 

89 

Total  dividend  one  share  .  . 

3  59 

2  70 

1  92 

1  13 

89 

Present  holding  value  of  1 
share  

$68  91 

$53  21 

$39  53 

$25  58 

$12  89 

The  balance-sheet  and  this  computation  are  made 
up  by  the  secretary  and  presented  to  the  board  of  di- 
rectors at  a  meeting  held  for  the  purpose  of  ascertain- 
ing and  declaring  the  dividend,  and  when  approved 
by  them  by  a  resolution  entered  in  the  minutes,  are 
entered  in  the  "  journal  day-book  "  (see  closing  en- 
tries) and  the  report  for  the  members  and  for  publica- 
tion is  made  accordingly. 


200  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 
STOCK  JOURNAL  DAY-BOOK. 


*i 

& 

fc 
4 

£  ° 

1 
£ 

i! 

s« 

1 

S 

Elmira,  N.  Y.,  April  23,  1883. 

i 

CAPITAL  STOCK,  SERIES  No.  1, 

1-5 

1 

45 

72 

To  SUNDRIES,* 

1 

1 

10 

72 

To  JAMES  N.  WARD, 

2 

110 

72 

To  SAMUEL  WHEELER, 

3 

110 

To  JOHN  D.  WILLIAMS, 
To  LUCY  WILLIAMS, 

4 

5 

I—  1  1—  t 

10 
5 

To  EOBERT  WOOD, 

27. 

i 

2 

Mem.  Loan  made  at  April  meeting, 
John  D.  Williams,  6  shares,  f 

November  24,  1885. 

1 

1 

5 

72 

JAMES  N.  WARD, 

1 

1 

5 

1 

To  CAPITAL  STOCK,  SERIES  1,J 

Certificate  No.  689,  issued  to  J.  N.  Ward 

for  five  shares  1st  series,  retained  by 

i  •                                                            * 
mm. 

SEYMOUR  DEXTER, 

203 

2 

5 

72 

To  JAMES  N.  WARD,* 

690 

2 

5 

February  14,  1886. 

RICHARD  ROE, 

212 

2 

10 

To  CAPITAL  STOCK,  SERIES  2, 

212 

2 

10 

JOHN  SMITH, 
To  CAPITAL  STOCK,  SERIES  3, 

408 

3 

10 

408 

3 

10 

Mem.  Loans  foreclosed,! 
Richard  Roe,                             10  shares 

2 

John  Smith,                             10      " 

3 

20  shares 

*  The  above  shows  the  form  of  entry  in  this  book  when  shares  are 
issued.     The  sum  received  for  them  appears  in  the  cash-received  book. 
They  are  in  this  department  dealt  with  only  in  regard  to  the  series  and 
number  of  shares. 

t  This  item  is  posted,  in  pencil,  to  the  u  Series  and  number  of  shares 
borrowed  on"  and  the  "  Shares  pledged  "  department  of  John  D.  Will- 
iams's  account  in  the  stock  ledger. 

J  The  above  is  the  appropriate  entry  in  case  of  a  withdrawal  of  stock. 

*  The  above  is  the  appropriate  entry  on  a  transfer  of  stock  from  one 
shareholder  to  another. 

I  The  above  arc  the  appropriate  entries  in  this  book  in  case  of  the 
foreclosure  of  mortgages  and  the  cancellation  of  shares  according  to  the 


HOW   TO  KEEP  ACCOUNTS. 


201 


Dr. 


STOCK  LEDGER,  PART  I. 

Capital  Stock,  Series  One. 


Or. 


Stock 

Stock  re- 

Date. 

Remarks. 

lo 

issued. 

Date. 

Remarks. 

J, 

deumed. 

• 

e  f> 

c  fc 

£ 

S'riet 

Sh. 

e 

S'rie*  SLar'» 

1888. 

1885. 

April 

23 

1 

1-5 

1 

45 

Nov. 

24 

ByJ.N.Ward 

2 

1 

1 

5 

The  entries  in  this  hook  are  taken  from  the  stock 
journal  day-book,  and  Part  I  shows  the  aggregate 
shares  issued  and  redeemed  in  each  series.  The  rul- 
ing is  necessarily  different  from  the  individual  accounts 
in  the  stock  ledger  shown  on  the  next  two  pages, 
because  the  information  desired  is  entirely  different. 


entries  of  the  same  date  in  the  form  of  the  journal  day-book  hereinbe- 
fore shown.  The  mem.  entries  are  to  bo  posted  in  pencil  to  the  loans 
paid  and  shares  released  columns  of  Richard  Roe  and  John  Smith  ac- 
counts in  the  stock  ledger. 


202  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 


Dr. 


STOCK-LEDGER,  PART   II. 

James  N.  Ward. 


,     | 

Series  and  number  of 

Shares 

Shares 

DaU. 

lUmarki. 

Fol. 

Cer- 
tifi- 

Se- 

shares  disposed  of 

borr'wOd 

paid. 

cate. 

112 

3 

4 

5 

6 

7 

8 

9 

10 

J'1! 

5 

Date.    ' 

1885,  Nov. 
1886,  Apr. 

24 

25 

Withdrawn, 
Balance, 

2 
L.72 

1 
689 
and 

5 

and 

5 
5 

5 

690 

2 

— 

— 

Samuel  Wheeler. 


27 


Williams. 


II 

1884 

1 

1 

6  Jan.  23 

78 

•1 

5 

This  portion  (Part  II)  of  the  stock-ledger  is  for  keeping 
the  accounts  with  the  members  to  show  how  many  shares  of 
stock  they  have,  how  many  have  been  borrowed  on,  and  how 
many  have  been  pledged.  The  credit  side  shows  how  many 
shares  have  been  acquired,  and  the  debtor  side  how  many 
have  been  withdrawn.  It  is  better  to  have  twenty  columns 
for  "  shares  acquired  "  and  "  shares  disposed  of,"  instead  of 


HOW   TO   KEEP  ACCOUNTS.  203 

STOCK-LEDGER,   PART  II. 

James  N.  Ward.  Cr. 


Stock 
pledged. 

Released. 

Date. 

Remarks. 

Fol. 

Cer- 
tifi- 
cate. 

Se- 
ries. 

Series  and  number  of 
shares  acquired. 

| 

i* 

Date. 

a 

1 

2 

3 

4   5 

6 

7 

8   9 

1888. 

• 

6S& 

April 

1885. 

28 

By  Cap.  Stock. 

1 

1 

1 

10 

Nov. 

24 

By  Transfer, 

2 

690 

2 

5 

10 

5 

1886. 

April 

25 

By  Balance,      L.72 

689 

1 

6 

5 

and 

and 

690 

2 

188T. 

April 

22 

By  Cap.  Stock, 

41 

715 

5 

10 

Samuel  Wheeler. 


2T 

1 

10 

1883. 
April 

23 

By  Cap.  Stock, 

1 

2 

1 

10 

John  D.  Williams. 


1 

78 

1 
1 

6 
5 

1888. 
April 

23 

By  Cap.  Stock, 

1 

8 

1 

10 

ten,  as  shown.  The  columns  for  "shares  borrowed"  and 
"  shares  paid  "  amount  to  a  single-entry  ledger  account,  as  do 
also  the  "  shares  pledged  "  and  "  released  "  columns,  making 
really  three  ledger  accounts  with  each  member,  all  under  the 
same  heading.  Reference  to  the  stock  journal  day-book  will 
supply  the  necessary  information. 


204:  CO-OPERATIVE  SAYINGS  AND  LOAN  ASSOCIATIONS, 


TKIAL  BALANCE   OF  STOCK-LEDGER, 


L.  F. 

NAME. 

Dr. 

Series  and  number  of  shares 

1 

2 

3 

4 

5 

72 

.Tamps  N.  Ward  .   . 

5 

5 

10 

72  !  Samuel  W  heeler  

10 

72    JohnD.  Williams  .... 

10 

1 

Capital  Stock,  Series  1. 

1200 

2 

8 

Capital  Stock.  Series  2. 
Capital  Stock,  Series  8. 

1300 
1400 

4 
5 

Capital  Stock,  Series  4. 
Capital  Stock,  Series  5. 

1500 
1600 

Footings,  page  1  

275    275    250 

825 

315 

Footings,  page  2  

325    800  j  300 

875 

875 

Footings,  page  8  

800    825    350 

375 

425 

Footings,  page  4  

275    895 

500 

_42_5 

_•» 

7000 

1200 

1300 

1400 

15001600 

INSURANCE  EXPIRATION  BOOK. 


'Reg.  No. 

NAME. 

Location  of  property. 

Amoun 

t. 

Jan. 

Feb. 

Mch. 

Apr. 

1 

John  D.  Williams  

520  Lake  St.  ... 

2000 

no 

1989 

278 

Samuel  Wheeler 

921  Main  St  

1000 

no 

801 

Richard  Itoe 

1206  Benton  St 

2000 

00 

This  book  has  thirty-one  pages,  and  is  used  for  a  single 
day  to  a  page.  A  policy  expiring  on  the  twelfth  day  of  any 
month  in  the  year  and  any  year  would  be  entered  on  this 
page,  the  year  being  set  down  in  the  column  headed  for  the 
proper  month.  Turn  to  the  form  of  the  security  register, 
and  you  find  loan  No.  301,  Richard  Roe.  His  property  is  in- 
sured in  the  ^Etna  Insurance  Co.,  and  expires  the  last  time  on 


HOW  TO  KEEP  ACCOUNTS. 


205 


TAKEN  APRIL  16,   1888. 


held. 

Series  and  number  of  shares  borrowed  on. 

Total 

1 

2 

8 

4 

5 

Total 

20 

10 

5 

ft 

10 

10 

10 

1-440 

00 

45 

35 

25 

38 

203 

1675 

75 

f>5 

45 

T,5 

45 

285 

1775 

66 

85 

86 

80 

83 

898 

•2070 

85 

90 

85 

55 

1)2 

407 

7000 

M, 

275 

250 

225 

258 

1308 

TWELFTH  DAY   OF   THE  MONTH. 


May. 

June 

July. 

Aug. 

Sept. 

Oct. 

Nov. 

Dec. 

Company. 

Agent. 

1891 

1887 

Home,  of  New  York  
Liberty,  of  New  York  
^Etna  of  Hartford         

J.  M.  Sly  &  Co. 
J.  M.  Sly  &  Co. 
T.  Perry  &  Co. 

August  12,  1887.  Above  you  find  it  on  the  page  for  the 
twelfth  day  of  the  month,  and  1887  written  in  the  August 
column.  Entries  are  made  from  the  policy  when  it  is  re- 
ceived, and  in  case  of  change  of  policies,  so  as  to  expire  on  a 
different  day  of  the  month,  a  new  entry  would  be  made  as 
above  under  the  new  day  of  expiration. 


206  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 


Gl     SECURITY  REGISTER  FOR  SECRETARY. 


No. 

Borrower. 

Maker  of  bond  and  mortgage,  and 
securities  taken. 

Shares  bor- 
rowed on. 

Date. 

Amoui 

Certif. 

S«r. 

Sh. 

301 

Richard  Roe. 
Foreclosed. 

1  bond  executed  by  Richard  Roe  ... 
1  mortgage  executed  by  Richard 
Roe  and  Susan  Roe,  his  wife.   .  .  . 
1  assignment  of  stock  executed  by 
R  Roe 

212 

2 

10 

1684. 
April 
1884. 
April 
1884. 
April 

30 
30 
30 

2000 
2000 
2000 

1  certificate  of  stock,  No.  212,  for  2d 
series,  10  shares,  pledged  by  Rich- 
ard Roe. 
1  abstract  of  title. 
1  ,<Etna  Ins.  Co.  policy,  No.  7080. 
Received  the  above-named  securi- 
ties May  20,  1884. 
G.  D.  Parsons,  Treasurer. 

When  the  loan  is  perfected  and  the  mortgage  is  returned 
from  the  office  for  recording  to  the  attorney  of  the  association, 
the  attorney  should  pass  the  papers  over  to  the  secretary,  who 
will  enter  them  on  this  register,  and  pass  them  over  to  the 
treasurer,  taking  the  treasurer's  receipt  hereon  for  the  papers 
passed  over.  This  fixes  the  responsibility  for  the  preservation 
of  the  papers,  and  if  any  are  omitted,  it  is  known  at  the  time. 

It  is  convenient  to  make  a  brief  minute  in  the  column 

SECURITY  REGISTER  FOR  TREASURER. 


No. 
801 

Borrower. 

Maker  of  bond  and  mortgage,  and 
securities  taken. 

Shares  bor- 
rowed on. 

Date. 

Am  oi 

Ctrtif. 

Ser. 

Sh. 
10 

Richard  Roe. 
Foreclosed. 

1  bond  executed  by  Richard  Roe.  .  . 
1  mortgage  executed  by  Richard 
Roe  and  Susan  Roe,  his  wife  
1  assignment  of  stock  executed  by 
R  Koe                        

212 

2 

1884. 
April 
1884. 
April 
1884. 
April 

30 
30 
30 

2000 
2000 
2000 

1  certificate  of  stock,  No.  212,  for  2d 
series,  10  shares,  pledged  by  Rich- 
ard Roe. 
1  abstract  of  title. 

HOW  TO  KEEP  ACCOUNTS. 
SECURITY  EEGISTER. 


207 


61 


Payments. 

Amount 
of 
insurance. 

Insurance  company. 

Policy  expires 

Remark.. 

Date. 

Amount. 

Month. 

Dayj    Year. 

2000 

JStna  

Aug. 

1? 

1884-'I87 

Mortgage  recorded 

April    80,   1884,    in 

book   No.  71,  pape 

68,  of  premises  .No. 
1206  Benton  St. 

February  14,  1886,  this 
mortgage  foreclosed 
and     the     proceeds 
paid    over    to    the 

treasurer. 

headed  "  Borrower  "  of  the  disposition  of  the  loan  as  "  fore- 
closed," "  paid,"  while  the  fuller  explanation  appears  in  the 
"  remarks  "  column. 

The  different  policies  of  insurance  on  the  property  are  to 
be  entered  here  with  date  of  expiration,  to  show  the  exact 
situation  of  the  securities  in  each  loan.  The  insurance  expi- 
ration book  is  to  give  a  handy  minute  of  the  expiration  of  all 
policies,  to  prevent  failure  to  renew. 

SECURITY  REGISTER. 


Payments. 

Amount 

Policy  expires 

of 

Insurance  company. 

Remarks. 

Date. 

Amount. 

insurance. 

Month. 

Day 

Tear. 

2000 

JStna        

Auff. 

19 

1884-'87 

Mortgage  recorded 

April   80,    1884,   to 

book  No.  71,  page 
68,  of  premises  No. 

1206  Benton  St. 

February  14,  1886,  this 

mortgage  foreclosed 
and  the  proceeds  re- 

ceived. 

208  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

The  treasurer's  security  register  is  ruled  like  the 
secretary's,  the  only  variation  in  the  make-up  being 
that  no  receipt  for  the  papers  is  provided.  All  of  the 
remarks  made  in  connection  with  the  secretary's  regis- 
ter apply  to  this,  as  the  information  desired  is  the 
same  in  both  cases. 


APPENDIX. 


NEW  YORK. 

CHAPTER  556,  LAWS  OF  1887. 
CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATION. 

1.  Corporators. — Corporate  Name. 

SECTION  1.  Any  fifteen  or  more  persons,  being  of  full  age, 
may  form  an  association  as  provided  in  this  act.  All  associa- 
tions formed  under  the  provisions  hereof  shall  be  known  as  co- 
operative savings  and  loan  associations ;  and  the  name  of  every 
association,  so  formed,  shall  contain,  as  a  part  thereof,  the 
words  Co-operative  Savings  and  Loan  Association. 

2.  Objects. 

SEC.  2.  The  object  and  purpose  of  such  associations  shall  be 
to  encourage  industry,  frugality,  home-building,  and  savings 
among  its  members ;  the  accumulation  of  savings,  the  loaning 
of  such  accumulations  to  its  members,  and  the  repayment  to 
each  member  of  his  savings  when  they  have  accumulated  to  a 
certain  sum,  or  at  any  time  when  he  shall  desire  the  same,  or 
the  association  shall  desire  to  repay  the  same. 

3.  Certificate  of  Association. — Statements  in. 
SEC.  3.  Said  association  shall  become  incorporated  by  tho 
said  fifteen  or  more  persons  making,  signing,  and  acknowledg- 
ing, in  the  manner  and  form  prescribed  for  the  acknowledg- 
ment of  deeds  in  this  State,  a  certificate,  wherein  shall  be  stated 


210  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

the  name  of  said  association;  that  the  association  is  formed 
under  and  for  the  purposes  prescribed  in  this  act;  the  town, 
village,  or  city  where  the  association  is  located  within  this 
State ;  and  the  limit  of  the  number  of  shares  of  stock  it  shall 
have  outstanding  at  any  one  time.  When  made  as  aforesaid, 
said  certificate  shall  be  filed  and  recorded  in  the  oifice  of  the 
Secretary  of  State,  and  upon  said  certificate  being  so  filed  and 
recorded,  the  Secretary  of  State  shall  issue  a  certificate,  in 
proper  and  suitable  form,  declaring  the  facts  contained  in  said 
original  certificate,  and  the  filing  and  recording  thereof  in  his 
office,  and  which  latter  certificate  shall  thereupon  be  recorded 
in  the  county  clerk's  office  of  the  county  where  said  association 
is  located ;  and  upon  the  same  being  so  recorded,  the  persons 
named  in  the  certificate  first  above  mentioned,  their  associates 
and  successors,  shall  become  a  corporate  body. 

4.  Officers. — By-Laws. — Special  Meetings,  and  voting  thereat. — 
Holding  over  by  Officers. 

SEC.  4.  The  officers  of  the  association  shall  consist  of  a 
president,  vice-president,  treasurer,  and  secretary,  who  shall  be 
ex-officio  members  of  the  board  of  directors,  which  shall  consist 
of  nine  members,  exclusive  of  said  ex-officio  members.  Other 
officers  may  be  authorized  by  the  by-laws.  The  duties  and 
compensation  of  the  officers,  their  terms  of  office,  the  time  of 
their  election,  and  time  of  periodical  meetings  of  the  officers 
and  shareholders  shall  be  determined  by  the  by-laws;  except 
that  the  board  of  directors  shall  determine  each  year  the  com- 
pensation of  the  treasurer  and  secretary. 

Special  meetings  of  the  officers  and  shareholders  shall  be 
called  and  held  as  provided  by  the  by-laws.  Each  shareholder 
shall  be  entitled  to  one  vote,  at  all  meetings  of  the  shareholders, 
for  each  share  owned  by  him  or  held  by  him  as  trustee  not  in 
arrears  for  dues.  All  officers  shall  hold  office  until  their  suc- 
cessors are  duly  elected  and  assume  the  duties  of  their  office. 
No  association  shall  expire  from  neglect  on  its  part  to  elect 
officers  at  the  time  prescribed  by  the  by-laws. 


APPENDIX.  211 

5.  Capital  of  Association. — Limitation. — Shares,  How  Issued. — 

Unpledged  /Shares. — Limitation  of  Shares. 
SEC.  5.  The  capital  of  said  association  shall  consist  of  the 
accumulated  savings  of  its  members,  which  it  holds,  and  shall 
not  exceed  at  any  time  one  million  dollars,  and  shall  be  divided 
into  shares  of  the  matured  value  of  two  hundred  dollars  each. 
The  total  number  of  shares  outstanding  at  any  time  shall  not 
exceed  ten  thousand.  The  shares  shall  be  issued  in  yearly  or 
half-yearly  series,  in  such  amounts  in  each  series,  and  at  such 
times  as  shall  be  determined  by  the  by-laws  of  the  association. 
No  share  of  a  prior  series  shall  be  issued  after  the  issuing  of 
shares  in  a  new  series.  Shares  which  have  not  been  pledged  as 
a  collateral  security  for  the  repayment  of  a  loan  shall  be  called 
unpledged  shares.  Shares  that  have  been  so  pledged,  shall  be 
called  pledged  shares.  No  person  shall  hold  more  than  ten  un- 
pledged shares  in  any  one  series,  nor  more  than  twenty  pledged 
shares  in  one  series. 

6.  Dues. — Payment  Thereof. — Fines  for  Arrears. — Entrance  Fee. 

SEC.  6.  Savings  paid  to  the  association  upon  shares  shall  be 
called  dues.  At  or  before  each  stated  monthly  or  semi-monthly 
meeting  of  the  board  of  directors  each  shareholder  shall  pay  to 
the  board  or  a  committee  thereof,  one  dollar  dues  upon  each 
share  of  stock  held  by  him  until  the  share  reaches  the  value  of 
two  hundred  dollars,  or  it  is  withdrawn,  canceled  or  forfeited. 
Payment  of  dues  on  shares  of  each  series  shall  commence  from 
its  issue.  The  association  shall  have  power  to  impose  and  col- 
lect a  fine,  not  exceeding  ten  per  cent  for  each  month  in  arrears, 
for  every  dollar  of  dues  or  interest  which  a  shareholder  shall 
refuse  or  neglect  to  pay  at  the  time  it  is  due.  They  shall  also 
have  power  to  charge  an  entrance  fee  of  not  exceeding  twenty- 
five  cents  on  every  share  of  stock  issued  by  the  association. 

7.  Unpledged  Shares,   Withdrawal  of  Accumulations  Upon. — 

Payment  to  Shareholders  Withdratving. — Proviso. — Retir- 
ing of  Unpledged  Shares. — Determination  by  Lot. 
SEC.  7.  The  accumulations  upon  unpledged  shares  may  be 
withdrawn,  and  the  shares  canceled  after  one  month's  written 
notice  of  such  intention  filed  with  the  secretary  at  or  before  a 


212  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

stated  monthly  meeting  of  the  board.  If  filed  before  such  meet- 
ing, the  one  month's  notice  shall  not  be  deemed  to  have  com- 
menced until  the  first  regular  meeting  after  the  filing.  The 
withdrawing  shareholder  shall  be  paid  the  amount  of  the  with- 
drawal value  of  his  accumulations  as  determined  under  the  by- 
laws, at  the  last  distribution  of  profits  before  the  notice  of  with- 
drawal, together  with  all  dues  paid  since  such  distribution,  and 
such  interest  on  the  value  of  the  shares  at  the  time  of  the  last 
distribution  and  on  the  dues  thereafter  paid,  as  the  by-laws  shall 
determine,  less  any  fines  unpaid  and  a  proportionate  share  of 
any  unadjusted  loss ;  provided,  that  at  no  time  shall  more  than 
one  half  the  receipts  of  the  association,  and  when  the  association 
is  indebted  upon  matured  shares,  no  more  than  one  third,  shall 
be  applicable  to  the  payment  of  withdrawing  shareholders,  with- 
out the  consent  of  the  board  of  directors;  and  when  the  de- 
mands of  withdrawing  shareholders  exceed  the  moneys  appli- 
cable to  their  payment,  they  shall  be  paid  in  the  order  in  which 
their  notices  of  withdrawal  were  filed  with  the  secretary.  The 
board  of  directors  may  at  their  discretion,  under  rules  made  by 
them,  retire  the  unpledged  shares  of  any  series  at  any  time 
after  four  years  from  the  date  of  their  issue,  by  enforcing  with- 
drawals of  the  same;  provided,  that  the  shareholders  whose 
shares  are  to  be  retired  shall  be  determined  by  lot,  and  that 
they  shall  be  paid  the  full  value  of  their  shares,  less  all  fines  and 
proportionate  part  of  any  unadjusted  loss. 

8.  Payment  of  Dues,   When  to  Cease. — Payment  of  Matured 

Shares. — Proportion  of  Receipts  Applicable. 
SEC.  8.  When  each  unpledged  share  of  a  given  series  reaches 
the  value  of  two  hundred  dollars,  all  payment  of  dues  thereon 
shall  cease,  and  the  holder  thereof  shall  be  paid  out  of  the  funds 
of  the  association  two  hundred  dollars  therefor,  with  such  rate 
of  interest  as  shall  be  determined  by  the  by-laws,  from  the  time 
the  board  of  directors  shall  declare  such  share  to  have  matured, 
until  paid ;  but  at  no  time  shall  more  than  om>  third  of  the  re- 
ceipts of  the  association  be  applicable  to  the  payment  of  matured 
shares,  without  the  consent  of  the  board  of  directors.  The  order 
of  the  payment  of  the  matured  shares  shall  be  determined  by 
the  board  of  directors. 


APPENDIX.  213 

9.  Loan  of  Accumulations  to  Members. — Open  Bidding. — Per- 

sons Bidding  Highest  to  Receive  Loan. — Deduction  of  Pre- 
mium.— Right  to  Borrow  Restricted. 

SEC.  9.  At  each  monthly  stated  meeting,  immediately  fol- 
lowing the  receipt  of  dues  and  interest,  the  board  of  directors 
shall  offer  to  members  of  the  association  desiring  to  borrow,  all 
accumulations  applicable  to  that  purpose;  the  same  shall  be 
loaned  in  sums  of  two  hundred  dollars,  the  value  of  a  matured 
share,  or  a  multiple  thereof,  or  the  fractional  parts  of  one  fourth 
or  one  half  thereof.  If  there  shall  be  more  than  one  member 
desiring  to  borrow,  their  right  to  a  loan  shall  be  determined  by 
an  open  bidding  of  a  premium  per  share  ;  the  member  bidding 
the  highest  premium  shall  be  entitled  to  the  loan,  upon  giving 
proper  security.  From  the  sum  loaned  shall  be  deducted  at  the 
time  of  loaning  the  amount  of  the  premium  bid.  The  receiving 
of  such  premium  or  interest  paid  on  the  loan  shall  not  be 
deemed  a  violation  of  the  usury  laws.  No  member  or  members 
can  borrow  a  larger  sum  than  shall  be  equal  to  the  matured 
value  of  the  shares  held  by  him  or  them.  A  borrowing  member 
for  each  share  or  fractional  part  thereof  borrowed  upon,  shall, 
in  addition  to  the  dues  on  his  shares,  pay  monthly  interest  on 
his  loan  at  the  rate  of  six  per  cent  per  annum,  or  such  lower 
rate  as  the  by-laws  shall  name,  until  the  shares  borrowed  upon 
reach  the  matured  value  of  two  hundred  dollars  each,  or  the 
loan  is  repaid ;  and  when  such  matured  value  is  reached,  the 
share  shall  cancel  the  loan  upon  it,  and  the  proper  surrenders 
and  acquittances  be  made. 

10.  Loans  to  be  Secured  by  Bond  and  First  Mortgage. — Trans- 

fer of  Unpledged  Shares  to  Secure  Loan. — Forfeiture  of 
Loan. — Conditions  of  Bond  and  Mortgage. — Repayment  of 
Loans. 

SEC.  10.  For  every  loan  made,  a  bond  secured  by  a  first 
mortgage  upon  unencumbered  real  estate  shall  be  given,  accom- 
panied by  a  transfer  and  pledge  to  the  association  of  the  shares 
borrowed  upon,  and  all  accumulations  that  have  or  shall  accrue 
thereon,  as  a  collateral  security  for  the  repayment  of  the  loan ; 
or,  in  lieu  of  the  mortgage,  the  borrower,  or  another,  may  trans- 
fer and  pledge  to  the  association  for  the  payment  of  the  loan, 


214  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

unpledged  shares,  the  withdrawal  value  of  which  under  the  by- 
laws, at  the  time  of  such  borrowing,  shall  exceed  the  amount 
borrowed  and  interest  thereon  for  six  months.  If  the  borrower 
neglects  to  offer  security  satisfactory  to  the  board  of  directors, 
within  the  time  provided  by  the  by-laws,  his  right  to  the  loan 
shall  be  forfeited,  and  he  shall  be  charged  with  one  month's 
interest,  and  all  necessary  expenses  incurred,  if  any,  under  the 
by-laws,  in  reference  to  his  proposed  loan.  All  bonds  and  mort- 
gages given  to  the  association  shall  be  deemed  conditioned  upon 
the  performances  of  the  provisions  of  this  act  relating  to  the 
repayment  of  loans  and  interest  thereon,  and  the  by-laws  of 
the  association,  although  the  same  may  not  be  fully  expressed 
therein.  A  borrower  may  repay  a  loan,  and  all  arrears  of  in- 
terest and  fines  thereon,  or  one  share  thereof,  that  is,  the  sum 
of  two  hundred  dollars,  at  any  stated  monthly  meeting,  or  at 
any  other  time,  but  when  not  made  at  a  stated  meeting,  he  shall 
pay  interest  up  to  the  first  monthly  meeting  after  such  payment. 
He  may  repay  his  loan  in  full,  thereby  relieving  his  shares  from 
liability  upon  the  pledge  thereof,  made  to  the  association,  or  he 
may,  by  a  proper  notice  and  direction  as  to  the  application,  have 
the  withdrawal  value  of  the  shares  borrowed  upon,  applied  in 
payment  or  part  payment  of  his  loan. 

11.  Arrearages  of  Members. — Notice  to  Pay  Same. — Forfeiture 

in  Certain  Cases. —  Withdrawal  Value. 
SEC.  11.  Whenever  any  member  shall  be  six  months  in  ar- 
rears in  the  payment  of  his  dues  upon  unpledged  shares,  the 
secretary  shall  give  him  notice  thereof  in  writing  and  a  state- 
ment of  his  arrearages,  by  mailing  the  same  to  him  at  the  last 
post-office  address  given  by  him  to  the  association,  and  if  he 
shall  not  pay  the  same  at  the  next  or  second  stated  monthly 
meeting  thereafter,  the  board  of  directors  may,  at  their  option, 
declare  his  shares  forfeited ;  and  at  the  time  of  such  forfeiture, 
the  withdrawal  value  thereof  shall  be  determined  and  stated, 
and  the  defaulting  member  shall  be  entitled  to  withdraw  the 
same  without  interest,  within  one  year  upon  such  notice  as  shall 
be  required  of  a  withdrawing  shareholder. 


APPENDIX.  215 

12.   Loan  to  Become  Due  when  Borrowing  Member  is  Six 

Months  in  Arrears. — Effect  Thereof. 

SEC.  12.  Whenever  a  borrowing  member  shall  be  six  months 
in  arrears  in  the  payment  of  his  dues  and  interest,  or  either,  tho 
whole  loan  shall  become  due  at  the  option  of  the  board  of  direct- 
ors ;  and  they  may  proceed  to  enforce  collection  upon  the  se- 
curities held  by  the  association.  The  withdrawal  value  at  the 
time  of  the  commencement  of  the  action,  of  all  shares  pledged 
as  collateral  security  for  the  loan,  shall  be  applied  upon  the 
loan  and  arrearages  of  interest  and  fines  thereon,  and  the  shares 
deemed  surrendered  to  the  association. 

13.  Purchase  of  Real  Estate  Held  Under.  Mortgage. 
SEC.  13.  Any  association  may  purchase  at  any  sale,  public  or 
private,  any  real  estate  upon  which  it  may  have  a  mortgage, 
judgment,  lien  or  other  incumbrance,  or  in  which  it  may  have 
any  interest ;  and  may  sell,  convey,  lease,  or  mortgage  the  same 
at  pleasure  to  any  person  or  persons. 

14.  Associations  may  Borrow  Money  for  Paying  Withdrawals, 
etc. — Loan  of  Surplus  to  other  Associations. — Proceedings 
Therefor. 

SEC.  14.  Any  association  organized  in  pursuance  of  the  pro- 
visions of  this  act,  may  borrow  money  for  the  purpose  of  making 
loans  or  paying  withdrawals,  not  exceeding,  however,  two  thou- 
sand dollars,  so  long  as  its  accumulated  capital  does  not  exceed 
ten  thousand  dollars ;  and  not  exceeding  six  thousand  dollars, 
so  long  as  its  accumulated  capital  shall  be  over  ten  thousand, 
and  does  not  exceed  sixty  thousand  dollars ;  and  whenever  its 
accumulated  capital  exceeds  sixty  thousand  dollars,  it  may  bor- 
row money  for  the  purposes  aforesaid  not  exceeding  ten  per  cent, 
of  its  accumulated  capital.  No  money  borrowed  shall  be  for  a 
longer  term  than  one  year.  Any  association  having  a  surplus 
in  its  treasury,  for  which  there  is  no  demand  for  loans,  with- 
drawing shareholders  or  matured  stock,  may  loan  the  same  to 
another  association,  organized  under  the  provisions  of  this  act, 
subject  to  the  provisions  of  this  section,  on  the  part  of  the  bor- 
rowing association.  No  association  shall  borrow  or  make  loans 
herein  authorized,  except  by  a  two-thirds  vote  of  its  board  of 


216   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

directors.    The  vote  to  be  recorded  by  ayes  and  nays  in  its 
regular  minutes. 

15.  Profits  and  Losses,  Distribution  of. — Manner  of  Distribu- 
tion.— Undistributed  Profits. — Reservation  of  Guarantee 
Fund. 

SEC.  15.  Profits  and  losses  shall  be  distributed  at  least  an- 
nually, and  always  before  issuing  a  new  series  of  stock  to  the 
shares  then  outstanding.  Profits  and  losses  shall  be  distributed 
to  all  shares,  in  all  series  outstanding  at  the  time  of  such  distri- 
bution, in  proportion  to  their  holding  value,  as  distinguished 
from  their  withdrawing  value,  except  that,  in  addition  thereto 
a  distribution  of  not  exceeding  the  amount  of  the  entrance  fee, 
in  the  discretion  of  the  board  of  directors,  may  be  made  to  each 
share  outstanding  in  the  last  series  issued  prior  to  the  distribu- 
tion. At  each  periodical  distribution  of  profits,  the  board  of 
directors  may  reserve  and  carry  as  undistributed  profits,  in  the 
nature  of  a  guaranty  fund,  any  sum  from  the  net  profits  that  in 
their  discretion  seems  wise,  to  be  applied  upon  any  future  losses 
that  may  occur  from  any  cause  whatsoever. 

16.  Transfer  of  Shares. — How  made. — Transfer  Fee. 
SEC.  16.  No  transfers  of  shares  shall  be  binding  upon  the 
association  until  the  same  have  been  made  upon  the  books  of 
the  association ;  and  the  transferee  thereof  shall  take  the  same, 
charged  with  all  the  liabilities  and  conditions  attaching  thereto 
in  the  hands  of  the  one  transferring  the  same.  The  association 
may  require  a  "  transfer  fee "  not  exceeding  twenty-five  cents 
per  share. 

17.  By-Laws,  Adoption  of. — Attorney  for  Association. 

SEC.  17.  The  association  as  soon  as  duly  incorporated  shall 
possess  power  to  adopt  by-laws,  not  inconsistent  with  the  pro- 
visions of  this  act,  regulating  the  due  conduct  of  the  business 
of  the  association,  defining  the  duties  of  officers  and  commit- 
tees, times  of  meetings,  mode  of  determining  and  declaring  the 
withdrawing  value  of  shares,  and  in  relation  to  all  other  mat- 
ters having  reference  to  the  conduct  of  the  business,  although 
not  specifically  mentioned  in  this  act.  The  board  of  directors 


APPENDIX.  217 

shall  have  power  to  appoint  and  remove  at  pleasure,  an  attorney 
for  the  association. 

IS.  Eligibility  to  Membership  in  Association. — Accumulations, 
how  far  Exempt.— Associations  Deemed  Savings  Institu- 
tions. 

SEC.  18.  Any  person  of  full  age  and  sound  mind  may  become 
a  member  of  the  association  by  taking  one  or  more  shares  there- 
in, and  subscribing  the  by-laws,  and  annexing  to  his  signature 
his  post-office  address;  and  whenever  he  desires  his  post-office 
address  changed,  he  shall  give  written  notice  thereof  to  the 
secretary  of  the  association ;  and  for  the  purpose  of  giving  any 
member  notice,  by  mail,  the  last  post-office  address  given  by 
him  shall  be  deemed  the  proper  one.  A  minor  may  hold  shares 
in  the  name  of  a  parent,  guardian,  or  next  friend  as  trustee  for 
him.  All  accumulations  upon  shares  in  said  association  held  by 
any  person  shall  be  exempt  from  execution  and  proceedings 
supplementary  thereto,  to  the  amount  of  six  hundred  dollars; 
and  the  association  itself  shall  be  deemed  an  institution  for 
savings  and  not  taxable  under  any  corporation  tax  law  which 
shall  exempt  savings-banks,  or  institutions  for  savings  from 
taxation. 

19.  Annual  Report  to  Bank  Department. — Further  Reports. 
SEC.  19.  Every  association  organized  under  the  provisions  of 
this  act  shall  annually  make  a  full  report  in  writing  of  the 
affairs  and  condition  of  such  corporation  on  the  first  day  of 
January  in  each  year  to  the  Superintendent  of  the  Bank  Depart- 
ment in  such  form  and  by  such  officers  of  the  corporation  as  the 
said  superintendent  may  designate.  Such  report  shall  be  verified 
by  the  oath  of  the  officers  making  the  same.  Every  association 
shall  make  any  further  reports  which  the  said  superintendent 
shall  require,  and  in  such  form,  and  as  to  such  matters  relating 
to  the  condition  and  conducting  of  the  business  of  the  associa- 
tion as  such  superintendent  shall  designate.  Any  willful  false 
swearing  in  making  and  verifying  said  reports  shall  be  deemed 
perjury. 


15 


218  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

SO.  Forfeiture  for  Failure  to  Report. — Recovery  of  Penalty. 

SEC.  20.  If  any  such  association  shall  fail  to  furnish  to  the 
Superintendent  of  the  Bank  Department  any  report  required  by 
this  act,  at  the  time  so  required,  it  shall  forfeit  the  sum  of  ten 
dollars  per  day  for  every  day  such  report  shall  be  delayed  or  with- 
held ;  and  the  Superintendent  may  maintain  an  action  in  his 
name  of  office  to  recover  such  penalty,  and  the  same  shall  be 
paid  into  the  treasury  of  the  State  and  applied  to  the  expenses 
of  the  Bank  Department. 

21.  Visitation  by  Bank  Superintendent. 
SEC.  21.  All  associations  organized  under  the  provisions  of 
this  act  shall  be  subject  to  the  visitation  and  examination  at  all 
times  by  the  Superintendent  of  the  Bank  Department,  his  depu- 
ties or  duly  appointed  agents,  upon  the  application  of  three  or 
more  members  of  said  association.  If  it  shall  appear  to  said 
superintendent,  from  the  report  of  any  said  association,  or  from 
an  examination  made  by  him,  his  deputies  or  duly  appointed 
agents,  that  any  such  association  is  violating  the  provisions  of 
this  act,  or  is  conducting  its  business  in  an  unsafe  or  unauthor- 
ized manner,  he  shall  by  an  order  under  his  hand  and  seal  ad- 
dress to  such  association,  direct  the  discontinuance  of  such 
illegal  and  unsafe  practices  ;  and  whenever  any  association  shall 
neglect  or  refuse  to  comply  with  such  order,  or  make  reports  as 
required,  he  shall  communicate  such  facts  to  the  Attorney-Gen- 
eral, who  shall  thereupon  be  authorized  to  institute  proceedings 
against  any  such  association  as  is  now,  or  may  hereafter  be 
"provided  for  by  law  in  the  case  of  an  insolvent  incorporation, 
or  such  other  proceedings  as  the  nature  of  the  case  may  re- 
quire. 

22.  Existing  Loan  and  Accumulating  Fund  Associations,  How 
Entitled  to  Benefits  of  this  Act. 

SEC.  22.  Any  association  now  existing  and  heretofore  incor- 
porated under  the-provisions  of  said  chapter  one  hundred  and 
twenty-two  of  the  laws  of  eighteen  hundred  and  fifty-one,  may 
be  entitled  to  the  benefits  of  this  act,  on  the  majority  vote  of  the 
shareholders  of  said  association,  directing  the  making  and  filing 
of  the  certificate  mentioned  in  the  third  section  of  this  act,  and 


APPENDIX.  219 

conforming  the  transaction  of  their  business  to  the  provisions 
of  this  act. 

28.  Exemption. 

SEC.  23.  Associations  organized  under  this  act  shall  not  be 
subject  to  the  provisions  of  chapter  one  hundred  and  forty- 
three  of  the  laws  of  eighteen  hundred  and  eighty-six. 

SEC.  24.  This  act  shall  take  effect  immediately. 


CHAPTER  122,  LAWS  OF  1851. 

An  act  for  the  incorporation  of  building,  mutual  loan,  and  ac- 
cumulating fund  associations. 

Companies,  How  Formed. 

SECTION  1.  Any  number  of  persons,  not  less  than  nine,  may 
associate  and  form  an  incorporated  company  for  the  purpose  of 
accumulating  a  fund  for  the  purchase  of  real  estate,  the  erection 
of  buildings,  or  the  making  of  other  improvements  on  lands,  or 
to  pay  off  incumbrances  thereon,  or  to  aid  its  members  in  ac- 
quiring real  estate,  making  improvements  thereon,  and  remov- 
ing incumbrances  therefrom ;  and  for  the  further  purpose  of 
accumulating  a  fund  to  be  returned  to  its  members  who  do  not 
obtain  advances  as  above  mentioned,  when  the  funds  of  such 
association  shall  amount  to  a  certain  sum  per  share,  to  be  speci- 
fied in  the  articles  of  association. 

Articles  of  Association. 

SEC.  2.  Such  persons  shall  severally  subscribe  articles  of  as- 
sociation, in  which  shall  be  set  forth  the  name  of  the  corpora- 
tion, the  time  of  its  regular  meetings,  and  how  special  meetings 
may  be  called,  and  what  shall  constitute  a  quorum  to  transact 
business  at  meetings ;  the  qualifications  of  members  and  how 
constituted ;  what  officers,  trustees,  and  attorney  there  shall  be, 
and  how  and  when  chosen,  and  their  duties,  and  how  removed 
or  suspended  from  office ;  the  entrance  fee  of  new  members  and 
new  shares,  the  monthly  or  weekly  dues  per  share,  the  redemp- 
tion fee  on  shares  on  whicn  advances  shall  be  made,  and  fees  to 
be  paid  on  the  transfer  of  shares ;  the  fines  and  penalties  for 


220  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

the  non-payment  of  dues  or  fees,  or  other  violation  of  the  articles 
of  association ;  the  manner  of  redemption  of  shares  by  advances 
made  thereon,  the  mortgaged  security  to  be  taken  on  such  ad- 
vances, and  how  the  same  may  be  redeemed  or  changed ;  the 
manner  of  the  transfer  or  withdrawal  of  shares ;  the  manner  of 
investing  funds  not  required  for  advances  on  shares ;  the  quali- 
fications of  voters  at  the  meetings,  and  the  mode  of  voting ;  the 
ultimate  amount  to  be  paid  to  the  owners  of  unredeemed  shares ; 
the  manner  of  altering  or  amending  the  articles  of  association, 
and  such  other  provisions  as  shall  be  necessary  for  the  convenient 
and  effective  transaction  of  the  business  thereof  ;  provided  that 
the  same  shall  not  in  any  respect  contravene  the  Constitution  or 
laws  of  this  State. 

Copy  of  Articles  when  to  be  Filed. — Powers  and  Limitations. 

SEC.  3.  A  true  copy  of  such  articles,  signed  by  the  officers  of 
the  association,  together  with  a  statement  showing  when  the  as- 
sociation was  organized,  and  the  place  of  the  transaction  of  its 
business,  and  the  names  of  the  officers  and  trustees  at  the  time 
of  the  making  of  such  statement,  which  shall  be  verified  by  oath 
or  affirmation  before  any  officer  authorized  to  take  affidavits,  to 
be  used  in  the  courts  of  justice,  shall  be  filed  in  the  office  of  the 
clerk  of  the  county  in  which  such  association  shall  transact  its 
business ;  and  thereupon  the  persons  who  have  subscribed  the 
articles  of  association  as  aforesaid,  and  such  other  persons  as 
shall  become  members  of  such  association,  and  their  successors, 
shall  be  a  body  corporate  by  the  name  specified  in  such  articles 
of  association,  and  shall  possess  the  powers  and  privileges  and 
be  subject  to  the  provisions  of  title  third  of  chapter  eighteen  of 
the  first  part  of  the  Revised  Statutes,  so  far  as  those  provisions 
are  consistent  with  the  provisions  of  this  act,  and  they  shall, 
by  their  corporate  name,  be  capable  in  law  of  purchasing,  hold- 
ing and  conveying  any  real  and  personal  estate  whatever,  which 
may  be  necessary  to  enable  said  company  to  carry  on  their 
operation  named  in  such  certificate. 

Calls  upon  Stock. 

SEC.  4.  It  shall  be  lawful  for  the  trustees  to  call  in  and  de- 
mand from  the  stockholders,  respectively,  all  such  sums  of 


APPENDIX.  221 

money  by  them  subscribed,  at  such  times  and  in  such  payments 
or  installments  as  the  articles  of  association  shall  prescribe,  un- 
der the  penalty  of  forfeiting  the  shares  of  stock  subscribed  for, 
and  all  previous  payments  made  thereon,  if  payment  shall  not 
be  made  by  the  stockholder  within  sixty  days  after  a  personal 
demand  or  notice  requiring  such  payment  shall  have  been  pub- 
lished for  six  successive  weeks  in  the  newspaper  nearest  to  the 
place  where  the  business  of  the  company  shall  be  carried  on  as 
aforesaid. 

Borrowing  Money. 

SEC.  5.  All  corporations  formed  under  this  act  shall  have 
power  to  borrow  money  for  temporary  purposes  not  inconsistent 
with  the  objects  of  their  organization;  but  no  loan  for  such 
purposes  shall  have  a  longer  duration  than  two  years,  nor  shall 
such  indebtedness  exceed  at  any  one  time  one  fourth  of  the 
aggregate  amount  of  the  shares  and  parts  of  shares,  and  the  in- 
come thereof,  actually  paid  in  and  received. 

Stock  for  Minors,  etc. 

SEC.  6.  Parents  and  guardians  may  take  and  hold  shares  in 
such  association  in  behalf  and  for  the  use  of  their  minor  chil- 
dren or  wards,  provided  the  cost  of  such  shares  be  defrayed 
from  the  personal  earnings  of  such  minor  children  or  wards,  or 
by  gifts  from  persons  other  than  their  male  parents ;  married 
women  may  take  and  hold  shares  in  such  associations,  provided 
the  cost  of  such  shares  be  defrayed  from  their  personal  earnings, 
the  personal  earnings  of  their  children  voluntarily  bestowed  for 
this  purpose,  or  from  property  bequeathed  or  given  to  them  by 
persons  other  than  their  husbands. 

Dividends  ;  Monthly  Payments. 

SEC.  7.  The  trustees  of  any  association  formed  under  the 
provisions  of  this  act  may,  from  time  to  time,  declare  dividends 
from  the  earnings  of  the  association,  payable  in  such  manner  as 
may  be  provided  in  the  articles  of  association  ;  but  no  dividend 
shall  be  declared,  except  from  the  earnings  of  the  association, 
and  if  the  trustees  of  any  such  association  shall  declare  and  pay 
any  dividend  when  the  company  is  insolvent,  or  any  dividend, 
the  payment  of  which  would  render  it  insolvent,  they  shall  be 


222  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

jointly  and  severally  liable  to  the  extent  of  the  dividend  so  de- 
clared and  paid,  for  all  the  debts  of  the  association  then  exist- 
ing or  that  shall  be  thereafter  contracted  while  they  shall 
respectively  continue  in  office;  provided,  that  if  any  of  the 
trustees  shall  object  to  the  declaring  of  such  dividend  or  to  the 
payment  of  the  same,  and  shall,  at  any  time  before  the  time 
fixed  for  the  payment  thereof,  file  a  certificate  of  his  objection 
in  writing  with  the  clerk  of  the  company,  and  with  the  clerk  of 
the  county,  he  shall  be  exempt  from  the  said  liability.  But  no 
trustee  who  shall  be  present  at  any  meeting  when  such  dividend 
is  declared,  shall  be  exempt  from  such  liability,  unless  he  shall 
then  and  there  object  to  the  declaration  or  payment  of  such 
dividend,  and  shall  also  procure  his  objection  to  be  noted  in  the 
book  of  minutes  of  such  association.  No  holder  of  redeemed 
shares  shall  claim  to  be  exempt  from  making  the  monthly 
or  other  stated  payments  provided  in  the  articles  of  association, 
upon  the  ground  that  by  reason  of  losses  or  otherwise,  the  asso- 
ciation has  continued  longer  than  was  originally  anticipated, 
whereby  the  payments  made  on  such  shares  may  amount  to 
more  than  the  amount  originally  advanced,  with  legal  interest 
thereon ;  nor  shall  the  imposition  of  fines  for  the  non-payment 
of  dues  or  fees,  or  other  violation  of  the  articles  of  association, 
nor  shall  the  making  of  any  monthly  payment  required  by  the  ar- 
ticles of  association,  or  of  any  premium  for  loans  made  to  mem- 
bers be  deemed  a  violation  of  the  provision  of  any  statute  against 
usury.  (Thus  amended  by  ch.  564  of  the  Laws  of  New  York,  1875.) 

Existing  Associations,  How  Entitled  to  Benefit  of  this  Act. 

SEC.  8.  Any  existing  association  formed  for  the  purposes 
mentioned  in  the  first  section  of  this  act,  may,  on  the  vote  of 
the  majority  of  the  voting  shares,  at  any  regular  meeting  after 
the  passage  of  this  act,  become  entitled  to  the  benefit  of  this 
act,  on  complying  with  the  second  and  third  sections  thereof, 
unless  the  second  section  has  heretofore  been  complied  with ;  in 
which  case  it  shall  be  necessary  to  comply  only  with  the  said 
third  section. 

Embezzlement,  How  Punished. 

SEC.  9.  No  officer,  trustee,  attorney,  agent  or  servant  of  any 
association  hereby  incorporated,  shall  use  or  dispose  of  any  part 


APPENDIX.  223 

of  the  funds  of  such  association,  or  assign,  transfer,  cancel  or 
deliver  up  or  acknowledge  satisfaction  of  any  bond,  mortgage 
or  other  written  instrument  belonging  to  such  association,  un- 
less duly  authorized,  or  be  guilty  of  any  fraud  in  the  perform- 
ance of  his  duties ;  and  every  person  guilty  of  a  violation  of 
this  section  shall  be  liable  civilly  to  the  party  injured,  to  the 
extent  of  the  damage  thereby  incurred,  and  shall  also  be  liable 
to  an  indictment  for  a  misdemeanor,  punishable  by  fine  or  im- 
prisonment, or  both,  in  the  discretion  of  the  court  by  which  he 
shall  be  tried. 

Annual  Report  to  be  Published. 

SEC.  10.  Each  association  formed  under  the  provisions  of 
this  act  shall,  at  the  close  of  the  first  year's  operations,  and  an- 
nually at  the  same  period  in  each  year  thereafter,  publish  in  at 
least  two  newspapers  published  in  the  same  place  where  their 
business  may  be  located,  or  if  no  newspapers  shall  be  published 
in  such  place,  then  in  any  two  newspapers  published  nearest 
such  place,  a  concise  statement  verified  on  the  oaths  of  its  presi- 
dent and  secretary,  showing  the  actual  financial  condition  of 
the  association,  and  the  amount  of  its  property  and  liabilities, 
specifying  the  same  particularly. 

Liability  of  Stockholders  and  Directors. 
SEC.  11.  All  the  shareholders  of  any  association  formed  un- 
der this  act,  shall  be  individually  liable  to  the  creditors  of  said 
association,  to  an  amount  equal  to  the  amount  of  stock  held  by 
them  respectively,  for  all  debts  contracted  by  such  association. 
The  directors  or  other  officers  of  every  association  formed  under 
this  act,  shall  be  personally  liable  for  any  fraudulent  use,  dis- 
position or  investment  of  any  moneys  or  property  belonging  to 
such  association,  or  for  any  loss  which  shall  be  incurred  by  any 
investment  made  by  such  directors  or  other  officers,  other  than 
such  as  are  mentioned  in  and  authorized  by  this  act ;  but  no 
director  or  other  officer  of  any  such  association  shall  be  liable  as 
aforesaid ;  except  he  authorized,  sanctioned,  approved  or  made 
such  fraudulent  use,  disposition  or  investment  as  aforesaid. 


224:  CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONS. 

Liabilities  of  Trustees. 

SEC.  12.  No  person  holding  stock  in  any  such  company,  or 
executor,  administrator,  guardian  or  trustee,  and  no  person 
holding  such  stock  as  collateral  security,  shall  be  personally  sub- 
ject to  any  liability  as  stockholder  of  such  company ;  but  the 
person  pledging  such  stock  shall  be  considered  as  holding  the 
same,  and  shall  be  liable  as  a  stockholder  accordingly  ;  and  the 
estate  and  funds  in  the  hands  of  such  executor,  administrator, 
guardian  or  trustee,  shall  be  liable  in  like  manner  and  to  the 
same  extent  as  the  testator,  or  intestate  or  the  ward  or  person 
interested  in  such  trust  fund  would  have  been  if  he  had  been 
living  and  competent  to  act  and  hold  the  same  stock  in  his  own 
name. 

Right  of  Voting. 

SEC.  13.  Every  such  executor,  administrator,  guardian  or 
trustee,  shall  represent  the  share  of  stock  in  his  hands  at  all 
meetings  of  the  company,  and  may  vote  accordingly  as  a  stock- 
holder ;  and  every  person  who  shall  pledge  his  stock  as  afore- 
said may,  nevertheless,  represent  the  same  at  all  such  meetings 
and  may  vote  accordingly  as  a  stockholder. 

Election  of  Officers. 

SEC.  14.  In  case  it  shall  happen  at  any  time  that  an  election 
of  officers  shall  not  be  made  on  the  date  designated  by  the  by- 
laws of  said  company,  when  it  ought  to  have  been  made,  the 
company  for  that  reason  shall  not  be  dissolved ;  but  it  shall  be 
lawful  on  any  other  day  to  hold  an  election  for  trustees  in  such 
manner  as  shall  be  provided  for  by  the  said  by-laws ;  and  all 
acts  of  trustees  shall  be  valid  and  binding  as  against  such  com- 
pany until  their  successors  shall  be  elected. 

Power  to  Repeal  or  Alter. 

SEC.  15.  The  legislature  may  at  any  time  alter,  amend  or 
repeal  this  act,  or  may  annul  or  repeal  any  incorporation  formed 
or  created  under  this  act ;  but  such  amendment  or  repeal  shall 
not,  nor  shall  the  dissolution  of  any  such  company  take  away  or 
impair  any  remedy  given  against  any  such  corporation,  its  stock- 
holders or  officers,  for  any  liability  which  shall  have  been  previ- 
ously incurred. 


APPENDIX.  225 

Capital  Stock,  how  Increased  or  Diminished. 
SEC.  16.  Any  company  which  may  be  formed  under  this  act 
may  increase  or  diminish  its  capital  stock,  by  complying  with 
the  provisions  of  this  act,  to  any  amount  which  may  be  deemed 
sufficient  and  proper  for  the  purposes  of  the  corporation ;  but 
before  any  corporation  shall  be  entitled  to  diminish  the  amount 
of  its  capital  stock,  if  the  amount  of  its  debts  and  liabilities  shall 
exceed  the  amount  of  capital  to  which  it  is  proposed  to  be  re- 
duced, such  amount  of  debts  and  liabilities  shall  be  satisfied  and 
reduced  so  as  not  to  exceed  such  diminished  amount  of  capital. 

Notice  of  Meeting. 

SEC.  17.  Whenever  any  company  shall  desire  to  call  a  meet- 
ing of  the  stockholders  for  the  purpose  of  increasing  or  dimin- 
ishing the  amount  of  its  capital  stock,  it  shall  be  the  duty  of  the 
trustees  to  publish  a  notice  signed  by  at  least  a  majority  of  them 
in  a  newspaper  in  the  county,  if  any  shall  be  published  therein, 
at  least  three  successive  weeks,  and  to  deposit  a  written  or  printed 
copy  thereof  in  the  post-office,  addressed  to  each  stockholder  at 
his  usual  place  of  residence,  at  least  three  weeks  previous  to  the 
day  fixed  upon  for  holding  such  meeting,  specifying  the  object 
of  the  meeting,  the  time  and  place  where  and  when  such  meet- 
ing shall  be  held,  and  the  amount  to  which  it  shall  be  proposed 
to  increase  or  diminish  the  capital,  and  a  vote  of  at  least  two 
thirds  of  all  the  shares  of  stock  shall  be  necessary  to  an  increase 
or  diminution  of  the  amount  of  its  capital  stock. 

Meeting,  how  Organized  and  Conducted. 
SEC.  18.  If  at  any  time  and  place  specified  in  the  notice  pro- 
vided for  in  the  preceding  section  of  this  act  stockholders  shall 
appear  in  person  or  by  proxy,  in  numbers  representing  not  less 
than  two  thirds  of  all  the  shares  of  stock  of  the  corporation, 
they  shall  organize  by  choosing  one  of  the  trustees  chairman  of 
the  meeting,  and  also  a  suitable  person  for  secretary,  and  pro- 
ceed to  a  vote  of  those  present  in  person  or  by  proxy  ;  and  if  on 
canvassing  the  votes  it  shall  appear  that  a  sufficient  number  of 
votes  has  been  given  in  favor  of  increasing  or  diminishing  the 
amount  of  capital,  a  certificate  of  the  proceeding,  showing  a 
compliance  with  the  provision  of  this  act,  the  amount  of  the  capi- 


226  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

tal  actually  paid  in,  the  whole  amount  of  debts  and  liabilities  of 
the  company,  and  the  amount  to  which  the  capital  stock  shall 
be  increased  or  diminished,  shall  be  made  out,  signed,  and  veri- 
fied by  the  affidavit  of  the  chairman  and  be  countersigned  by 
the  secretary ;  and  such  certificate  shall  be  acknowledged  by  the 
chairman  and  filed  as  required  by  the  first  section  of  this  act, 
and  when  so  filed  the  capital  stock  of  such  corporation  shall  be 
increased  or  diminished  to  the  amount  specified  in  such  certifi- 
cate. 

Exemption. 

SEC.  19.  The  shares  held  by  the  members  of  all  associations 
incorporated  under  the  provisions  of  this  act  shall  be  exempt 
from  sale  on  execution  for  debt  to  an  extent  not  exceeding  six 
hundred  dollars  in  such  shares  at  their  par  value. 

Loan  to  Members. 

SEC.  20.  No  loan  made  by  any  such  association  to  any  of  its 
members  may  exceed  in  amount  the  par  value  of  the  capital 
stock  for  which  such  member  may  have  subscribed. 

Certificate,  how  made  Evidence. 

SEC.  21.  The  copy  of  any  certificate  of  incorporation,  filed  in 
pursuance  of  this  act,  certified  by  the  county  clerk  or  his  deputy 
to  be  a  true  copy  and  of  the  whole  of  such  certificate,  shall  be 
received  in  all  courts  and  places  as  presumptive  legal  evidence 
of  the  facts  therein  stated. 


CHAPTER  564,  LAWS  OF  1875. 

An  act  to  amend  chapter  one  hundred  and  twenty-two  of  the 
laws  of  eighteen  hundred  and  fifty-one,  entitled  "An  act 
for  the  incorporation  of  building,  mutual  loan,  and  accu- 
mulating fund  associations." 

(SECTION  1  amends  SEC.  7,  ch.  122,  of  the  Laws  of  1851.) 

To  make  Annual  Reports. 

SEC.  2.  Every  corporation  organized  under  the  provisions  of 
this  act,  and  every  corporation  heretofore  organized  under  the 


APPENDIX.  227 

laws  of  this  State  for  purposes  similar  to  those  provided  for  in 
said  act,  shall  annually  make  a  full  report  in  writing  of  the  af- 
fairs and  condition  of  such  corporation,  on  the  first  day  of  Janu- 
ary in  each  year,  to  the  Superintendent  of  the  Banking  Depart- 
ment, in  such  form  and  by  such  officers  of  the  corporation  as  the 
said  Superintendent  may  designate,  which  report  shall  be  in 
place  of  any  report  which  any  such  corporation  may  now  be  re- 
quired to  make  to  the  supreme  court,  the  comptroller,  or  other- 
wise. Such  report  shall  be  verified  by  the  oath  or  affirmation  of 
the  officers  making  such  report ;  and  any  willful  false  swearing 
in  regard  to  such  report  shall  be  deemed  perjury  and  be  subject 
to  the  prosecutions  and  punishments  prescribed  by  law  for  that 
offense.  Every  such  report  shall  be  made  within  twenty  days 
after  the  day  to  which  it  relates,  and  shall  be  in  such  form  and 
contain  such  statements,  returns,  and  information,  as  to  the 
affairs,  business,  condition,  obligations  and  resources  of  such 
corporation  as  the  said  Superintendent  may  from  time  to  time 
prescribe  and  require ;  and  the  said  Superintendent  may,  if  he 
be  of  the  opinion  that  it  is  desirable,  require  that  a  like  report, 
either  wholly  or  in  part  as  to  the  particulars  aforesaid,  be  made 
to  him  at  any  time  by  any  such  corporation  aforesaid  within 
such  period  as  he  may  designate. 

Examination  of  Affairs  of  Corporations. 
SEC.  3.  Whenever  the  stockholders  of  any  corporation  organ- 
ized under  the  provisions  of  this  act  shall  deem  that  a  personal 
examination  by  said  superintendent  of  the  affairs  of  said  cor- 
poration is  desirable  or  necessary,  it  shall  be  the  duty  of  said 
superintendent,  on  the  request  in  writing,  signed  by  not  less 
than  five  of  the  stockholders  of  said  corporation,  that  such  ex- 
amination be  made  either  by  himself  or  by  some  person  duly 
appointed  by  him  for  that  purpose,  to  make  a  full  and  careful 
examination  of  the  affairs  of  said  corporation,  and  make  his 
report  thereon,  as  herein  provided.  The  person  making  such 
examination  shall  have  power  to  administer  oaths  and  take  all 
testimony  by  him  deemed  necessary  and  proper  and  to  compel  the 
attendance  of  witnesses  and  the  production  of  books  and  papers, 
by  like  process  and  in  the  same  manner  as  now  provided  by  law 
to  procure  the  attendance  of  witnesses  and  the  production  of 


228  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

books  and  papers  in  the  courts  of  record  in  this  State.  The 
expense  of  such  examination  shall  be  borne  by  said  corporation, 
but  no  charge  shall  be  made  therefor,  when  the  examination  is 
made  by  said  superintendent  personally  or  by  one  of  the  salaried 
employes  of  his  department,  except  for  necessary  traveling  and 
other  expenses ;  whenever  said  superintendent  shall  appoint  any 
person  other  than  a  salaried  officer  in  his  department  to  make 
such  examination,  the  amount  charged  therefor  shall  not  exceed 
the  sum  of  ten  dollars  per  day  for  the  time  actually  expended 
in  making  the  same,  and  the  actual  and  necessary  expenses  as 
hereinbefore  provided.  (Thus  amended  by  ch.  96,  Laws  of  1878.) 

Nature  of  Examination. 

SEC.  4.  On  every  such  examination  inquiry  shall  be  made  as 
to  the  condition  and  resources  of  the  corporation  generally,  the 
mode  of  conducting  arid  managing  its  affairs,  the  action  of  its 
directors  or  trustees,  the  investment  of  its  funds,  the  safety  and 
prudence  of  its  management,  the  security  afforded  to  those  by 
whom  its  engagements  are  held,  and  whether  the  requirements 
of  its  charter  and  of  law  have  been  complied  with  in  the  admin- 
istration of  its  affairs. 

When  found  to  be  Violating  Charter,  Proceedings  by  Attorney- 
General. 

SEC.  5.  If  it  shall  appear  to  the  said  Superintendent  from 
the  report  of  any  such  corporation,  or  from  any  examination 
made  by  him,  or  from  the  report  of  any  examination  made 
to  him,  that  any  corporation  has  committed  a  violation  of 
its  charter  or  of  law,  or  is  conducting  business  in  an  unsafe 
or  unauthorized  manner,  he  shall  by  an  order  under  his  hand 
and  seal  of  office,  addressed  to  such  corporation,  direct  the  dis- 
continuance of  such  illegal  or  unsafe  practices  and  conformity 
with  the  requirements  of  its  charter  and  of  law,  and  with  safety 
and  security  in  its  transactions,  and  whenever  any  corporation 
shall  refuse  or  neglect  to  make  such  report  as  is  hereinbefore 
required,  or  to  comply  with  any  such  order  as  aforesaid;  or 
whenever  it  shall  appear  to  the  superintendent  that  it  is  unsafe 
or  inexpedient  for  any  corporation  to  continue  to  transact  busi- 
ness, he  shall  communicate  the  facts  to  the  attorney-general, 


APPENDIX.  229 

who  shall  thereupon  be  authorized  to  institute  such  proceedings 
against  any  such  corporation  as  are  now,  or  may  hereafter  be 
provided  for  by  law  in  the  case  of  insolvent  corporations,  or  such 
other  proceedings  as  the  nature  of  the  case  may  require. 

Penalty  for  Failure  to  Report. 

SEC.  6.  If  any  such  corporation  shall  fail  to  furnish  to  the 
superintendent  of  the  banking  department  any  report  or  state- 
ment required  by  this  act,  at  the  time  so  required,  it  shall  for- 
feit the  sum  of  ten  dollars  per  day  for  every  day  such  report  or 
statement  shall  be  so  delayed  or  withheld ;  and  the  said  super- 
intendent may  maintain  an  action  in  his  name  of  office  to  recover 
such  penalty,  and,  when  collected,  the  same  shall  be  paid  into  the 
treasury  of  the  State  and  be  applied  to  the  expenses  of  the  bank 
department. 


PENNSYLVANIA. 

LAWS    OF   PENNSYLVANIA    RELATING    TO    BUILDING    AND 
LOAN  ASSOCIATIONS. 

Section  one  of  the  general  law  of  Pennsylvania,  relating  to  the 
incorporation  of  certain  corporations,  passed  in  1874,  provides : 
Sec.  1.  "  Be  it  enacted,  etc.,  that  corporations  may  be  formed 
under  the  provisions  of  this  act  by  the  voluntary  association  of 
five  or  more  persons  for  the  purposes  and  in  the  manner  men- 
tioned herein."  Then  follows  the  classification  of  such  corpo- 
rations and  the  mode  of  their  incorporation.  Section  37  of  said 
general  act  relates  to  building  and  loan  associations,  and  pro- 
vides as  follows : 

SECTION  37.  Building  and  loan  associations  incorporated 
under  the  provisions  of  this  act  shall  have  the  powers,  and,  from 
the  date  of  the  letters-patent  creating  the  same,  when  not  other- 
wise provided  in  this  act,  be  governed,  managed  and  controlled 
as  follows : 

CLAUSE  1.  They  shall  have  the  power  and  franchise  of 
loaning  or  advancing  to  the  stockholders  thereof  the  moneys 
accumulated,  from  time  to  time,  and  the  power  and  right  to 
secure  the  repayment  of  such  moneys,  and  the  performance  of 


230   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

the  other  conditions  upon  which  the  loans  are  to  be  made,  by 
bond  and  mortgage  or  other  security,  as  well  as  the  power  and 
right  to  purchase  or  erect  houses,  and  to  sell,  convey,  lease  or 
mortgage  the  same  at  pleasure  to  their  stockholders,  or  others 
for  the  benefit  of  their  stockholders,  in  such  a  manner  also  that 
the  premiums  taken  by  the  said  association,  for  the  preference 
or  priority  of  such  loans,  shall  not  be  deemed  usurious ;  and  so 
also  that  in  case  of  non-payment  of  the  installments,  premiums 
or  interest  by  borrowing  stockholders,  for  six  months,  payment 
of  principal,  premiums  and  interest,  without  deducting  the  pre- 
mium paid,  or  interest  thereon,  may  be  enforced  by  proceeding 
on  their  securities  according  to  law. 

CLAUSE  2.  The  capital  stock  of  any  corporation  created 
for  such  purposes,  by  virtue  of  this  act,  shall  at  no  time  consist 
in  the  aggregate  of  more  than  one  million  dollars,  to  be  divided 
into  shares  of  such  denomination,  not  exceeding  five  hundred 
dollars  each,  and  in  such  numbers  as  the  corporators  may,  in 
the  application  for  their  charter,  specify :  Provided,  That  the 
capital  stock  may  be  issued  in  series,  but  no  such  series  shall  at 
any  issue  exceed  in  the  aggregate  five  hundred  thousand  dol- 
lars, the  installments  on  which  stock  are  to  be  paid  at  such  time 
and  place  as  the  by-laws  shall  appoint ;  no  periodical  payment 
of  such  installments  to  be  made  exceeding  two  dollars  on  each 
share,  and  said  stock  may  be  paid  off  and  retired  as  the  by-laws 
shall  direct ;  every  share  of  stock  shall  be  subject  to  a  lien  for 
the  payment  of  unpaid  installments  and  other  charges  incurred 
thereon  under  the  provisions  of  the  charter  and  by-laws,  and 
the  by-laws  may  prescribe  the  form  and  manner  of  enforcing 
such  lien ;  new  shares  of  stock  may  be  issued  in  lieu  of  the 
shares  withdrawn  or  forfeited ;  the  stock  may  be  issued  in  one 
or  in  successive  series,  in  such  amount  as  the  board  of  directors 
or  the  stockholders  may  determine ;  and  any  stockholder  wish- 
ing to  withdraw  from  the  said  corporation  shall  have  power  to 
do  so,  by  giving  thirty  days'  notice  of  his  or  her  intention  to 
withdraw,  when  he  or  she  shall  be  entitled  to  receive  the 
amount  paid  in  by  him  or  her,  less  all  fines  and  other  charges ; 
but  after  the  expiration  of  one  year  from  the  issuing  of  the 
series,  such  stockholder  shall  be  entitled,  in  addition  thereto,  to 
legal  interest  thereon :  Provided,  That  at  no  time  shall  more 


APPENDIX. 

than  one  half  of  the  funds  in  the  treasury  of  the  corporation  be 
applicable  to  the  demands  of  withdrawing  stockholders,  without 
the  consent  of  the  board  of  directors,  and  that  no  stockholder 
shall  be  entitled  to  withdraw,  whose  stock  is  held  in  pledge  for 
security.  Upon  the  death  of  a  stockholder,  his  or  her  legal 
representatives  shall  be  entitled  to  receive  the  full  amount  paid 
in  by  him  or  her,  and  the  legal  interest  thereon,  first  deducting 
all  charges  that  may  be  due  on  the  stock ;  no  fines  shall  be 
charged  to  a  deceased  member's  account,  from  and  after  his  or 
her  decease,  unless  his  legal  representatives  of  such  decedent 
assume  the  future  payments  on  the  stock. 

CLAUSE  3.  The  number,  titles,  function  and  compensation 
of  the  officers  of  any  such  corporation,  their  terms  of  office,  the 
times  of  their  elections,  as  well  as  the  qualifications  of  electors, 
and  the  ratio  and  manner  of  voting,  and  the  periodical  meetings 
of  the  said  corporation,  shall  be  determined  by  the  by-laws,  when 
not  provided  by  this  act. 

CLAUSE  4.  The  said  officers  shall  hold  stated  meetings,  at 
which  the  money  in  the  treasury,  if  over  the  amount  fixed  by 
the  charter  as  the  full  value  of  a  share,  shall  be  offered  for  loan, 
in  open  meeting,  and  the  stockholder  who  shall  bid  the  highest 
premium  for  the  preference  or  priority  of  loan,  shall  be  entitled 
to  receive  a  loan  of  not  more  than  the  amount  fixed  by  charter 
as  the  full  value  of  a  share,  for  each  share  of  stock  held  by  such 
stockholder:  Provided,  That  a  stockholder  may  borrow  such 
fractional  part  of  the  amount  fixed  by  charter  as  the  full  value 
of  a  share,  as  the  by-laws  may  provide ;  good  and  ample  secur- 
ity, as  prescribed  by  the  by-laws  of  the  corporation,  shall  be 
given  by  the  borrower,  to  secure  the  repayment  of  the  loan,  in 
case  the  borrower  shall  neglect  to  offer  security,  or  shall  offer 
security  that  is  not  approved  by  the  directors,  by  such  time  as 
the  by-laws  may  prescribe,  he  or  she  shall  be  charged  with  legal 
interest,  together  with  any  expenses  incurred,  and  the  loss  in 
premium,  if  any,  on  a  resale,  and  the  money  may  be  resold  at 
the  next  stated  meeting ;  in  case  of  non-payment  of  install- 
ments or  interest  by  borrowing  stockholders,  for  the  space  of 
six  months,  payment  of  principal  and  interest,  without  deduct- 
ing the  premium  paid  or  interest  thereon,  may  be  enforced,  by 
proceeding  on  their  securities  according  to  law. 


232  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS, 

CLAUSE  5.  A  borrower  may  repay  a  loan  at  any  time,  and 
in  case  of  the  repayment  thereof,  before  the  expiration  of  the 
eighth  year,  after  the  organization  of  the  corporation,  there 
shall  be  refunded  to  such  borrower  one  eighth  of  the  premium 
paid  for  every  year  of  the  said  eight  years  then  unexpired : 
Provided,  When  the  stock  is  issued  in  separate  series  the  time 
shall  be  computed  from  the  date  of  the  issuing  the  series  of 
stock  on  which  the  loan  was  made. 

CLAUSE  6.  No  premiums,  fines,  or  interest  on  such  pre- 
miums, that  may  accrue  to  the  said  corporation,  according  to 
the  provisions  of  this  act  shall  be  deemed  usurious ;  and  the 
same  may  be  collected  as  debts  of  like  amount  are  now  by  law 
collected  in  this  commonwealth. 

CLAUSE  7.  No  corporation  or  association  created  under  this 
act  shall  cease  or  expire  from  neglect  on  the  part  of  the  corpo- 
rators to  elect  officers  at  the  time  mentioned  in  their  charter  or 
by-laws ;  and  all  officers  elected  by  such  corporation  shall  hold 
their  offices  until  their  successors  are  duly  elected. 

CLAUSE  8.  Any  loan  or  building  association  incorporated 
by  or  under  this  act,  is  hereby  authorized  and  empowered  to 
purchase,  at  any  sheriff's  or  other  judicial  sale,  or  at  any  other 
sale,  public  or  private,  any  real  estate,  upon  which  such  asso- 
ciation may  have  or  hold  any  mortgage,  judgment,  lien,  or 
other  incumbrance,  or  ground-rent,  or  in  which  said  association 
may  have  an  interest,  and  the  real  estate  so  purchased,  or  any 
other  that  such  association  may  hold  or  be  entitled  to  at  the 
passage  of  this  act,  to  sell,  convey,  lease,  or  mortgage,  at  pleas- 
ure, to  any  person  or  persons  whatsoever ;  and  all  sales  of  real 
estate  heretofore  made  by  such  associations  to  any  person  or 
persons  not  members  of  the  association  so  selling,  are  hereby 
confirmed  and  made  valid. 

CLAUSE  9.  All  such  corporations  shall  have  full  power  to 
purchase  lands  and  to  sell  and  convey  the  same,  or  any  part 
thereof,  to  their  stockholders  or  others  in  fee  simple,  with  or 
without  the  reservation  of  ground-rents;  but  the  quantity  of 
land  purchased  by  any  one  of  said  associations  hereafter  incor- 
porated, shall  not,  in  the  whole,  exceed  fifty  acres ;  and  in  all 
cases  the  land  shall  be  disposed  of  within  ten  years  from  the 
date  of  the  incorporation  of  such  associations  respectively. 


APPENDIX.  233 

CLAUSE  10.  All  land  and  building  associations  are  hereby 
authorized  to  make  sale  of,  and  assign  or  extinguish,  to  any 
person  or  persons,  the  ground-rents  created  as  aforesaid. 

The  foregoing  general  act  was  amended  by  No.  14  of  the 
Laws  of  Pennsylvania,  for  the  year  1879,  which  is  as  follows : 

No.  14. 

An  act  relating  to  mutual  savings-fund,  building,  and  loan  asso- 
ciations, regulating  the  mode  of  charging  premiums,  bonus 
or  interest  in  advance,  of  withdrawals,  of  repayment  and 
collection  of  loans ;  also  restricting  the  power  to  levy  ex- 
cessive fines,  and  defining  the  rights  and  liabilities  of  mar- 
ried women  stockholders,  and  prescribing  the  non-applica- 
tion to  these  associations  of  the  bonus  tax  and  registry  laws 
for  corporations. 

SECTION  1.  Be  it  enacted,  etc.,  That  it  shall  be  lawful  for  any 
mutual  savings-fund,  or  building  and  loan  association,  now  in- 
corporated or  hereafter  to  be  incorporated,  in  addition  to  dues 
and  interest,  to  charge  and  receive  the  premium  or  bonus  bid  by 
a  stockholder  for  preference  or  priority  of  right  to  a  loan  in 
periodical  installments ;  and  such  premium  or  bonus  so  paid  in 
installments  shall  not  be  deemed  usurious,  but  shall  be  taken  to 
be  a  payment  as  it  falls  due,  in  contradistinction  to  a  premium 
charged  and  paid  in  advance ;  and  in  so  far  as  said  premium  or 
bonus  so  charged  and  paid,  in  addition  to  dues  and  interest, 
shall  be  in  excess  of  two  dollars  for  each  periodical  payment,  the 
same  shall  be  lawful,  any  law,  usage,  or  custom  to  the  contrary 
notwithstanding.  It  shall  also  be  lawful  for  any  mutual  sav- 
ings-fund or  building  and  loan  association  to  charge  and  deduct 
interest  in  advance,  in  lieu  of  premiums  for  preference  or  pri- 
ority of  right  to  a  loan  :  Provided,  That  the  certificate  of  incor- 
poration of  each  association  hereafter  to  be  incorporated,  and 
the  certificate  provided  in  section  nine  of  this  act  for  those  in- 
corporated, shall  set  forth  whether  the  premium  or  bonus  bid 
for  the  prior  right  to  a  loan  shall  be  deducted  therefrom  in  ad- 
vance or  paid  in  periodical  installments,  or  whether  interest  in 
advance  shall  be  deducted  from  the  loan  in  lieu  of  premium 
or  bonus. 

10 


234  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

SEC.  2.  Stockholders  withdrawing  voluntarily  shall  receive 
such  proportion  of  the  profits  of  the  association  or  such  rate  of 
interest  as  may  be  prescribed  by  the  by-laws,  any  law  or  usage 
to  the  contrary  notwithstanding ;  but  payment  of  the  value  of 
stock  so  withdrawn  shall  only  be  due  when  the  funds  now  ap- 
plicable by  law  to  the  demand  of  withdrawing  stockholders  are 
sufficient  to  meet  and  liquidate  the  same,  and  then  only  in  the 
order  of  the  respective  times  of  presentation  of  the  notices  of 
such  withdrawals,  which  must  have  been  presented  in  writing 
at  a  previous  stated  meeting,  and  have  been  then  and  there  in- 
dorsed as  to  times  of  presentation  by  the  officer  designated  by 
the  by-laws  of  the  association. 

SEC.  3.  The  by-laws  may  provide  for  the  involuntary  with- 
drawal and  cancellation  at  or  before  the  maturity  of  shares  of 
stock  not  borrowed  on :  Provided,  That  such  withdrawal  and 
cancellation  shall  be  pro  rata  among  the  shares  of  the  tame 
series  of  stock :  And  provided  further,  That  not  less  than  legal 
interest  shall  be  credited  and  allowed  to  each  share  so  with- 
drawn and  canceled. 

SEC.  4.  A  borrower  may  repay  a  loan  at  any  time,  and  in 
case  of  the  repayment  thereof  before  the  maturity  of  the  shares 
pledged  for  said  loan,  there  shall  be  refunded  to  such  borrower 
(if  the  premiums,  bonus,  or  interest  shall  have  been  deducted  in 
advance),  such  proportions  of  the  premiums,  bonus,  or  advance 
interest  bid,  as  the  by-laws  may  determine:  Provided,  That  in 
no  case  shall  the  association  retain  more  than  one  one  hundredth 
of  said  premiums  or  bonus  for  each  calender  month  that  has  ex- 
pired since  the  date  of  the  meeting  upon  which  the  loan  was 
made,  or  if  the  interest  in  advance,  it  shall  retain  only  the  in- 
terest due  on  the  loan  up  to  the  time  of  settlement :  And  fur- 
ther pi'ovided,  That  such  borrower  shall  receive  the  withdraw- 
ing value  of  the  shares  pledged  for  said  loan,  and  the  shares 
shall  revert  back  to  the  association. 

SEC.  5.  In  case  of  non-payment  of  installments  of  stock,  pre- 
miums, dues,  or  interest,  by  borrowing  stockholders,  for  the 
space  of  six  months,  payment  of  the  same,  together  with  the 
full  principal  of  the  loan,  may  be  enforced  by  proceeding  on 
their  securities  according  to  law ;  and  the  moneys  so  recovered 
shall  be  paid  into  the  treasury  of  the  association  for  such  uses 


APPENDIX.  235 

(loans  or  otherwise)  as  may  be  deemed  proper  by  the  associa- 
tion ;  and  if  the  said  moneys  so  recovered,  together  with  the 
withdrawal  value  of  the  shares  of  such  defaulting  borrower, 
shall  exceed  the  amount  it  would  have  required,  according  to 
the  preceding  section,  to  have  voluntarily  repaid  the  loan,  to- 
gether with  all  the  expenses  incurred  by  the  association,  such 
excess  shall  be  repaid  to  such  defaulting  borrower. 

SEC.  6.  Fines  or  penalties  for  the  non-payment  of  install- 
ments of  dues,  interest,  and  bonus  or  premium,  shall  not  exceed 
two  per  centum  per  month  on  all  arrearages. 

SEC.  7.  It  shall  be  lawful  for  any  married  woman  of  full  age 
to  hold  stock  in  any  of  said  saving-funds,  building,  or  loan  asso- 
ciations ;  and,  as  such  stockholder,  she  shall  have  all  the  rights 
and  privileges  of  other  members,  including  the  right  to  borrow 
money  from  said  associations  and  bid  premiums  therefor,  and 
shall  also  have  the  right  and  power  to  secure  such  loan  by 
transferring  her  said  stock  or  other  securities  to  said  association 
from  which  the  same  was  borrowed,  or  by  executing  bond  and 
mortgage  upon  her  separate  real  estate  to  secure  said  loan : 
Provided,  however,  that  the  husband  of  such  married  woman 
join  in  the  execution  of  such  bond  and  mortgage;  and  such 
married  woman  shall  also  have  the  right  to  sell,  assign,  and 
tranfer  her  said  stock  or  withdraw  the  same,  without  joining 
the  husband  in  such  transfer  or  withdrawal ;  and  it  shall  be 
lawful  for  any  such  savings-fund,  building,  or  loan  association 
to  collect  such  loan  made  to  such  married  woman,  including  the 
dues,  interest,  premium  and  fines,  as  loans  are  made  by  such 
associations  to  other  members  as  are  now  by  law  collected,  arid 
such  stock  or  interest  in  such  stock  shall  not  be  liable  for  the 
debts  of  any  husband  of  such  married  woman. 

SEC.  8.  The  bonus  or  tax  due  to  the  commonwealth  upon 
the  capital  stock  of  corporations,  as  provided  for  by  the  act  of 
the  first  of  May,  one  thousand  eight  hundred  and  sixty-eight, 
or  by  any  other  act,  shall  not  apply  to  or  be  due  from  mutual 
savings-fund,  or  building  and  loan  associations ;  nor  shall  the 
registry  for  corporations,  prescribed  by  the  first  section  of  the 
act  of  first  of  May,  one  thousand  eight  hundred  and  sixty-eight, 
the  first  section  of  the  act  of  twenty-fourth  of  April,  one  thou- 
sand eight  hundred  and  seventy-four,  and  the  twenty-sixth  sec- 


236   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

tion  of  the  act  of  twenty-ninth  of  April,  one  thousand  eight 
hundred  and  seventy-four,  apply  to  or  be  required  of  mutual 
savings-fund,  or  building  and  loan  associations. 

SEC.  9.  Mutual  savings-fund,  or  building  and  loan  associa- 
tions, heretofore  incorporated  under  the  provisions  of  any  law, 
shall  be  entitled  to  all  the  privileges,  immunities,  franchises, 
and  powers  conferred  by  this  act,  upon  filing  with  the  secre- 
tary of  the  commonwealth  a  certificate  of  their  acceptance  of 
the  same  in  writing,  under  the  duly  authenticated  seal  of  said 
association,  which  certificate  also  shall  prescribe  their  mode  or 
plan  of  charging  premiums,  bonus,  or  advance  interest,  as  set 
forth  in  the  first  section  of  this  act ;  and  upon  such  acceptance 
and  approval  thereof  by  the  governor,  he  shall  issue  letters 
patent  to  said  corporation  reciting  the  same. 

SEC.  10.  All  laws  or  parts  of  laws  inconsistent  with  the  pro- 
visions of  the  act  are  hereby  repealed. 


MASSACHUSETTS. 

The  following  is  the  law  of  this  State,  as  reported  by  the 
Commissioners  of  Savings-Banks,  December  31,  1887 : 

SECTION  I.  Twenty-five  or  more  persons  who  associate  them- 
selves together  by  an  agreement  in  writing,  with  the  intention 
of  forming  a  corporation  for  the  purpose  of  accumulating  the 
savings  of  its  members  paid  into  such  corporation  in  fixed  peri- 
odical installments,  and  lending  to  its  members  the  funds  so 
accumulated,  shall  be  and  remain  a  corporation  upon  complying 
with  the  provisions  of  the  three  following  sections : 

SEC.  2.  The  agreement  shall  set  forth  the  fact  that  the  sub- 
scribers thereto  associated  themselves  with  the  intention  of 
forming  a  corporation;  the  name  by  which  the  corporation 
shall  be  known ;  the  purpose  for  which  it  is  formed ;  the  town 
or  city,  which  shall  be  within  this  Commonwealth,  in  which  it  is 
located ;  and  the  limit  of  the  capital  to  be  accumulated. 

SEC.  3.  The  name  shall  be  one  not  previously  in  use  by  any 
existing  corporation  established  under  the  laws  of  this  Common- 
wealth, and  shall  be  changed  only  by  act  of  the  General  Court. 


APPENDIX.  237 

The  words  "co-operative  savings-fund  and  loan  association" 
shall  form  a  part  of  the  name. 

Section  three  of  chapter  one  hundred  and  seventeen  of  the 
Public  Statutes,  relative  to  the  name  of  co-operative  savings-fund 
and  loan  associations,  is  hereby  amended  by  striking  out  the 
words  "  co-operative  savings-fund  and  loan  association,"  in  the 
fourth  line,  and  inserting  in  place  thereof  the  words  "  co-opera- 
tive bank." 

The  title  of  said  chapter  one  hundred  and  seventeen  of  the 
Public  Statutes  is  hereby  amended  by  striking  out  the  words 
"savings-fund  and  loan  associations,"  and  inserting  in  place 
thereof  the  word  "  banks." 

The  names  of  all  co-operative  savings-fund  and  loan  associa- 
tions heretofore  organized  are  hereby  changed  by  striking  out 
in  each  the  words  "savings-fund  and  loan  association,"  and  in- 
serting in  place  thereof  the  word  "  bank  " ;  and  they  shall  here- 
after be  known  as  ''  co-operative  banks." 

The  first  and  second  sections  of  this  act  shall  take  effect 
upon  its  passage,  and  the  third  section  upon  the  first  day  of 
July,  in  the  year  eighteen  hundred  and  eighty-three. 

SEC.  4.  The  provisions  of  sections  eighteen,  twenty,  and 
twenty-one  of  chapter  one  hundred  and  six  shall  apply  to  such 
corporations,  except  that,  in  the  certificate  signed  by  the  Secre- 
tary of  the  Commonwealth,  the  limit  of  capital  to  be  accumu- 
lated, as  fixed  in  the  agreement  of  association,  shall  be  inserted, 
instead  of  the  amount  of  the  capital,  that  the  certificate  required 
by  said  section  twenty-one  to  be  filed  and  recorded  may  be 
signed  and  sworn  to  by  the  presiding  and  financial  officers,  and 
a  majority  at  least  of  the  officers  possessing  the  powers  of  direct- 
ors by  whatever  name  they  may  be  called,  and  that  the  fees  to 
be  paid  for  filing  and  recording  the  certificates  required  by  said 
section  twenty-one,  including  the  issuing  of  the  certificate  of 
organization,  shall  be  five  dollars. 

SEC.  5.  The  capital  to  be  accumulated  shall  not  exceed  one 
million  dollars,  and  shall  be  divided  into  shares  of  the  ultimate 
value  of  two  hundred  dollars  each.  The  limitation  of  capital  to 
be  accumulated  in  any  co-operative  bank  now  organized  or  here- 
after formed  under  the  provisions  of  chapter  one  hundred  and 
seventeen  of  the  Public  Statutes  shall  be  held  to  apply  to  capi- 


238  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

tal  actually  paid  in,  and  no  such  bank  shall  be  restrained  from 
issuing  shares  so  long  as  the  capital  actually  paid  in  on  shares 
is  not  in  excess  of  one  million  dollars.  The  shares  may  be  issued 
in  quarterly,  half-yearly,  or  yearly  series,  in  such  amounts  and 
at  such  times  as  the  members  may  determine.  No  person  shall 
hold  more  than  twenty-five  shares  in  the  capital  of  any  one  such 
corporation.  No  shares  of  a  prior  series  shall  be  issued  after 
the  issue  of  a  new  series. 

SEC.  6.  The  number,  title,  duties,  and  compensation  of  the 
officers  of  the  corporation,  their  terms  of  office,  the  time  of 
their  election,  as  well  as  the  qualifications  of  electors  and  the 
time  of  each  periodical  meeting  of  the  officers  and  members, 
shall  be  determined  by  the  by-laws ;  but  no  member  shall  be  en- 
titled to  more  than  one  vote  at  any  election.  All  officers  shall 
continue  in  office  until  their  successors  are  duly  elected,  and  no 
corporation  shall  expire  from  neglect  on  its  part  to  elect  officers 
at  the  time  prescribed  by  the  by-laws. 

In  any  co-operative  bank  now  or  hereafter  formed  under  the 
provisions  of  chapter  one  hundred  and  seventeen  of  the  Public 
Statutes,  the  offices  of  secretary  and  treasurer  may  be  held  by 
one  and  the  same  person. 

SEC.  7.  The  officers  shall  hold  stated  monthly  meetings.  At 
or  before  each  of  these  meetings  every  member  shall  pay  to  the 
corporation,  as  a  contribution  to  its  capital,  one  dollar  as  dues 
upon  each  share  held  by  him  until  the  share  reaches  the  ulti- 
mate value  of  two  hundred  dollars  or  is  withdrawn,  canceled 
or  forfeited.  Payment  of  dues  on  each  series  shall  commence 
from  its  issue. 

SEC.  8.  A  member  may  withdraw  his  unpledged  shares  at 
any  time  by  giving  thirty  days'  notice  of  his  intention  so  to  do, 
written  in  a  book  held  and  provided  by  the  corporation  for  that 
purpose.  Upon  such  withdrawal  the  shareholder's  account  shall 
be  settled  as  follows :  From  the  amount  then  standing  to  the 
credit  of  the  shares  to  be  withdrawn  there  shall  be  deducted  all 
fines,  a  proportionate  part  of  any  unadjusted  loss,  together  with 
such  proportion  of  the  profits  previously  credited  to  the  shares 
as  the  by-laws  may  provide,  and  such  shareholders  shall  be  paid 
the  balance  :  Provided,  that  at  no  time  shall  more  than  one  half 
of  the  funds  in  the  treasury  be  applicable  to  the  demands  of  with- 


APPENDIX.  239 

drawing  members  without  the  consent  of  the  directors.  The  di- 
rectors may  at  their  discretion,  under  rules  made  by  them,  retire 
the  unpledged  shares  of  any  series  at  any  time  after  four  years  from 
the  date  of  their  issue  by  enforcing  the  withdrawal  of  the  same ; 
but  whenever  there  shall  remain  in  any  series,  at  the  expiration 
of  five  years  after  the  date  of  its  issue,  an  excess  above  one  hun- 
dred unpledged  shares,  then  it  shall  be  the  duty  of  the  directors 
to  retire  annually  twenty-five  per  centum  of  such  excess  existing 
at  said  expiration  of  five  years  after  the  date  of  its  issue,  so  that 
not  more  than  one  hundred  unpledged  shares  shall  remain  in 
such  series  at  the  expiration  of  nine  years  from  the  date  of  its 
issue,  and  thereafter  the  directors  may  in  their  discretion  retire 
such  other  unpledged  shares  as  they  consider  the  best  interests 
of  the  bank  to  require  :  Provided,  that  whenever  under  the  pro- 
visions of  this  section  the  withdrawal  of  shares  is  to  be  enforced 
the  shares  to  be  retired  shall  be  determined  by  lot,  and  the  hold- 
ers thereof  shall  be  paid  the  full  value  of  their  shares,  less  all 
fines  and  a  proportionate  part  of  any  unadjusted  loss  :  Provided, 
also,  that  shares  pledged  for  share  loans  shall  be  treated  as  un- 
pledged shares. 

Shares  may  be  issued  in  the  name  of  a  minor,  and  if  so  issued 
may,  at  the  discretion  of  the  directors,  be  withdrawn,  in  manner 
as  provided  in  section  two  of  this  act,  by  such  minor,  the  parent 
or  guardian  of  such  minor,  and  in  either  case  the  payments 
made  on  such  withdrawals  of  shares  shall  be  valid.  When  a 
share  or  shares  are  held  by  any  one  in  trust  for  another,  the 
name  and  residence  of  the  person  for  whom  such  share  or  shares 
are  held  shall  be  disclosed,  and  the  account  shall  be  kept  in  the 
name  of  such  holder  as  trustee  for  such  person  ;  and,  if  no  other 
notice  of  the  existence  and  terms  of  such  trust  has  been  given 
in  writing  to  the  corporation,  in  the  event  of  the  death  of  the 
trustee  such  shares  may  be  withdrawn  by  the  person  for  whom 
such  deposit  was  made  or  by  his  legal  representatives. 

SEC.  9.  When  each  unpledged  share  of  a  given  series  reaches 
the  value  of  two  hundred  dollars  all  payments  of  dues  thereon 
shall  cease,  and  the  holder  thereof  shall  be  paid  out  of  the  funds 
of  the  corporation  two  hundred  dollars  thereof  with  interest  at 
the  rate  of  six  per  cent  a  year  from  the  time  of  such  maturity 
to  the  time  of  such  payment :  Provided,  that  at  no  time  shall 


240  CO-OPERATIVE  SWINGS  AND  LOAN  ASSOCIATIONS. 

more  than  one  half  of  the  funds  in  the  treasury  be  applicable 
to  the  payment  of  such  matured  shares  without  the  consent 
of  the  directors:  Provided,  further,  that  when  any  series  of 
shares,  either  pledged  or  unpledged,  reaches  maturity  between 
the  dates  of  adjustment  of  profits  or  whenever  shares  are  retired 
between  such  dates,  the  holders  of  such  shares  shall,  in  addition 
to  the  value  thereof,  be  entitled  to  interest  at  the  rate  of  six  per 
cent  per  annum  for  all  full  months  from  the  date  of  the  preced- 
ing adjustment. 

Chapter  one  hundred  and  seventeen  of  the  Public  Statutes  is 
amended  as  follows  by  adding  to  section  nine  the  following 
words  :  "  And  that  before  paying  matured  shares  all  arrears  and 
fines  shall  be  deducted." 

SEC.  10.  The  moneys  accumulated,  after  due  allowance  made 
for  all  necessary  and  proper  expenses  and  for  the  withdrawal  of 
shares,  shall  at  each  stated  monthly  meeting  be  offered  to  the 
members  according  to  the  premiums  bid  by  them  for  priority  of 
right  to  a  loan.  Every  member  whose  bid  is  accepted  shall  be 
entitled,  upon  giving  proper  security,  to  receive  a  loan  of  two 
hundred  dollars  for  each  share  held  by  him  or  such  fractional 
part  of  two  hundred  dollars  as  the  by-laws  may  allow.  If  a 
balance  of  money  remains -unsold  after  a  monthly  sale,  the 
directors  may  invest  the  same  in  any  of  the  securities  named  in 
the  second  clause  of  section  twenty  of  chapter  one  hundred 
and  sixteen. 

SEC.  11.  Premiums  for  loans  shall  consist  of  a  percentage 
charged  on  the  amount  lent  in  addition  to  interest,  and  shall  be 
deemed  to  be  a  consideration  paid  by  the  borrower  for  the  pres- 
ent use  and  possession  of  the  future  or  ultimate  value  of  his 
shares,  and  shall,  together  with  interest  and  fines,  be  received  by 
the  corporation  as  a  profit  on  the  capital  invested  in  the  loan, 
and  shall  be  distributed  to  the  various  shares  and  series  of  said 
capital  as  hereinafter  provided. 

SEC.  12.  A  borrowing  member,  for  each  share  borrowed 
upon,  shall,  in  addition  to  his  dues  and  monthly  premium,  pay 
monthly  interest  on  his  loan  at  the  rate  of  six  per  cent  per 
annum  until  his  shares  reach  the  ultimate  value  of  two  hun- 
dred dollars  each,  or  the  loan  has  been  repaid  ;  and  when  said 
ultimate  value  is  reached,  said  shares  and  loan  shall  be  declared 


APPENDIX.  241 

canceled  and  satisfied,  and  the  balance,  if  any,  due  upon  the 
shares  shall  be  paid  to  the  member. 

Any  corporation  organized  under  said  chapter  one  hundred 
and  seventeen  may  provide  in  its  by-laws  that  the  bid  for  loans 
at  its  stated  monthly  meeting  shall,  instead  of  a  premium,  be  a 
rate  of  annual  interest  upon  the  sum  desired,  payable  in  monthly 
installments.  Such  bids  shall  include  the  whole  interest  to  be 
paid,  and  may  be  at  any  rate  not  less  than  five  per  centum  per 
annum. 

SEC.  13.  For  every  loan  made,  a  note  secured  by  first  mort- 
gage of  real  estate  shall  be  given,  accompanied  by  a  transfer 
and  pledge  of  the  shares  of  the  borrower.  The  shares  so  pledged 
shall  be  held  by  the  corporation  as  collateral  security  for  the 
performance  of  the  conditions  of  said  note  and  mortgage.  Said 
note  and  mortgage  shall  recite  the  number  of  shares  pledged 
and  the  amount  of  money  advanced  thereon,  and  shall  be  con- 
ditioned for  the  payment,  at  the  stated  meetings  of  the  cor- 
poration, of  the  monthly  dues  on  said  shares,  and  the  interest 
and  premium  on  the  loan,  together  with  all  fines  on  payments 
in  arrears  until  said  shares  reach  the  ultimate  value  of  two 
hundred  dollars  each,  or  said  loan  is  otherwise  canceled  and 
discharged :  Provided,  that  the  shares,  without  other  security, 
may,  in  the  discretion  of  the  directors,  be  pledged  as  security 
for  loans,  to  an  amount  not  exceeding  their  value  as  adjusted 
at  the  last  adjustment  and  valuation  of  shares  before  the  time 
of  the  loan. 

If  the  borrower  neglects  to  offer  security  satisfactory  to  the 
directors  within  the  time  prescribed  by  the  by-laws,  his  right  to 
the  loan  shall  be  forfeited,  and  he  shall  be  charged  with  one 
month's  interest  and  one  month's  premium  at  the  rate  bid  by 
him,  together  with  all  expenses,  if  any,  incurred ;  and  the  money 
appropriated  for  such  loan  may  be  reloaned  at  the  next  or  any 
subsequent  meeting. 

SEC.  14.  A  borrower  may  repay  a  loan  at  any  time,  upon 
application  to  the  corporation,  whereupon,  on  settlement  of  his 
account,  he  shall  be  charged  with  the  full  amount  of  the  orig- 
inal loan,  together  with  all  monthly  installments  of  interest, 
premium  and  fines  in  arrears,  and  shall  be  given  credit  for  the 
withdrawing  value  of  his  shares  pledged  and  transferred  as 


242  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

security ;  and  the  balance  shall  be  received  by  the  corporation 
in  full  satisfaction  and  discharge  of  said  loan :  Provided,  that 
all  settlements  made  at  periods  intervening  between  stated  meet- 
ings of  the  directors  shall  be  made  as  of  the  date  of  the  stated 
meeting  next  succeeding  such  settlement ;  and,  Provided,  that 
a  borrower  desiring  to  retain  his  shares  and  membership  may 
at  his  option  repay  his  loan  without  claiming  credit  for  said 
shares,  whereupon  said  shares  shall  be  retransferred  to  him, 
and  shall  be  free  from  any  claim  by  reason  of  said  canceled 
loan.  Partial  payment  of  loans  on  real  estate  made  by  any 
co-operative  bank  may  be  received  in  sums  of  fifty  dollars  or 
any  multiple  thereof ;  and  for  each  two  hundred  dollars  so  re- 
paid one  share  of  stock  shall  be  released  from  pledge. 

SEC.  15.  Members  who  make  default  in  the  payment  of  their 
monthly  dues,  interest,  and  premiums,  shall  be  charged  a  fine 
not  exceeding  two  per  cent,  a  month  on  each  dollar  in  arrears. 
No  fines  shall  be  charged  after  the  expiration  of  six  months 
from  the  first  lapse  in  any  such  payment,  nor  upon  a  fine  in 
arrears.  The  shares  of  a  member  who  continues  in  arrears 
more  than  six  months  shall,  at  the  option  of  the  directors,  if 
the  member  fails  to  pay  the  arrears  within  thirty  days  after 
notice,  be  declared  forfeited,  and  the  withdrawing  value  of  the 
shares  at  the  time  of  the  first  default  shall  be  ascertained,  and, 
after  deducting  all  fines  and  other  legal  charges,  the  balance 
remaining  shall  be  transferred  to  an  account  to  be  designated 
the  "  Forfeited  Share  Account,"  to  the  credit  of  the  defaulting 
member.  Said  member,  if  not  a  borrower,  shall  be  entitled, 
upon  thirty  days'  notice,  to  receive  the  balance  so  transferred 
without  interest  from  the  time  of  the  transfer,  in  the  order  of 
his  turn,  out  of  the  funds  appropriated  to  the  payment  of  with- 
drawals. All  shares  so  forfeited  or  transferred  shall  cease  to 
participate  in  any  profits  of  the  corporation  accruing  after  the 
last  adjustment  and  valuation  of  said  shares  before  said  first 
default. 

SEC.  16.  If  a  borrowing  member  is  in  arrears  for  dues,  inter- 
est, premium  or  fines,  for  more  than  six  months,  the  directors 
may,  at  their  discretion,  declare  the  shares  forfeited,  after  one 
month's  notice,  if  the  arrears  continue  unpaid.  The  account  of 
such  borrowing  member  shall  then  be  debited  with  the  arrears 


APPENDIX.  243 

of  interest  "  premium,"  and  fines  of  date  of  forfeiture,  and  the 
shares  shall  be  credited  upon  the  loan  at  their  withdrawing 
value.  The  balance  of  the  account  may,  and  after  six  months 
shall,  be  enforced  against  the  security,  and  be  recovered  as  se- 
cured debts  are  recovered  at  law. 

SEC.  17.  The  general  accounts  of  every  such  corporation 
shall  be  kept  by  double  entry.  All  moneys  received  by  the  cor- 
poration from  each  member  shall  be  receipted  for  by  persons 
designated  by  the  directors,  in  a  pass-book  provided  for  by  the 
corporation  for  the  use  of,  and  to  be  held  by,  the  member ;  and 
said  pass-book  shall  be  plainly  marked  with  the  name  and  resi- 
dence of  the  holder  thereof,  the  number  of  shares  held  by  him, 
and  the  number  or  designation  of  the  series  or  issue  to  which 
said  shares  respectively  belong,  and  the  date  of  the  issue  of 
such  series.  All  moneys  so  received  shall  be  originally  entered 
by  the  proper  officer  in  a  book  to  be  called  the  "  cash-book,"  to 
be  provided  by  the  corporation  for  the  purpose,  and  the  entries 
therein  shall  be  so  made  as  to  show  the  name  of  the  payer,  the 
number  of  shares,  the  number  or  designation  of  the  series  or 
issue  of  the  particular  share  or  shares  so  entered,  together  with 
the  amount  of  dues,  interest,  premiums,  and  fines  paid  thereon, 
as  the  case  may  be.  Each  payment  shall  be  classified  and  en- 
tered into  a  column  devoted  to  its  kind.  Said  cash-book  shall 
be  closed  after  the  termination  of  each  stated  meeting,  and 
shall  be  an  exhibit  of  the  receipts  of  all  moneys  paid  at  said 
meeting.  All  payments  made  by  the  corporation  for  any  pur- 
pose whatsoever  shall  be  by  order,  check,  or  draft  upon  the 
treasurer,  signed  by  the  president  and  secretary,  and  indorsed 
by  the  persons  in  whose  favor  the  same  are  drawn.  The  name 
of  the  payee,  the  amount  paid,  and  the  purpose,  object,  or  thing 
for  which  the  payment  is  made,  together  with  its  date,  shall  be 
entered  on  the  margin  of  said  order,  check,  or  draft.  The  treas- 
urer shall  dispose  of  and  secure  the  safe  keeping  of  all  moneys, 
securities,  and  property  of  the  corporation,  in  the  manner  des- 
ignated by  the  by-laws,  and  the  treasurer  and  secretary  shall 
give  such  security  for  the  faithful  performance  of  their  respect- 
ive duties  as  the  by-laws  may  direct. 

SEC.  18.  The  profits  and  losses  may  be  distributed  annually, 
semi-annualy,  or  quarterly,  to  the  shares  then  existing,  but  shall 


244  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

be  distributed  at  least  once  in  each  year,  and  whenever  a  new 
series  of  shares  is  to  be  issued.  Profits  and  losses  shall  be  dis- 
tributed to  the  various  shares  existing  at  the  time  of  such  dis- 
tribution, in  proportion  to  their  value  at  that  time,  and  shall  be 
computed  upon  the  basis  of  a  single  share  fully  paid  to  the  date 
of  distribution.  Losses  shall  be  apportioned  immediately  after 
their  occurrence. 

At  each  periodical  distribution  of  profits  the  directors  shall 
reserve  as  a  guarantee  fund  a  sum  not  less  than  one  nor  more 
than  five  per  cent  of  the  net  profits  accruing  since  the  next  pre- 
ceding adjustment,  until  such  fund  amounts  to  five  per  cent  of 
the  dues  capital,  which  fund  shall  thereafter  be  maintained  and 
held ;  and  said  fund  shall  be  at  all  times  available  to  meet  losses 
in  the  business  of  the  corporation  from  depreciation  of  its 
securities  or  otherwise. 

SEC.  19.  Any  such  corporation  may  purchase  at  any  sale, 
public  or  private,  any  real  estate  upon  which  it  may  have  a 
mortgage,  judgment,  lien,  or  other  incumbrance,  or  in  which  it 
may  have  an  interest ;  and  may  sell,  lease,  convey,  or  mortgage, 
at  pleasure,  the  real  estate  so  purchased  to  any  person  or  persons 
whatsoever.  All  real  estate  so  acquired  shall  be  sold  within  five 
years  from  the  acquisition  of  the  title  thereto. 

SEC.  20.  The  commissioners  of  savings-banks  shall  perform 
in  reference  to  every  such  corporation,  the  same  duties,  and  shall 
have  the  same  powers,  as  are  required  of  or  given  to  them  in 
reference  to  savings-banks,  and  shall  annually  make  a  report  to 
the  General  Court  of  such  facts  and  statements  respecting  such 
associations,  and  in  such  forms  as  they  deem  that  the  public 
interest  requires.  Every  officer  of  such  corporation  shall  answer 
truly  all  inquiries  made,  and  shall  make  all  returns  required  by 
the  commissioners. 


OHIO. 

LAWS  OF  OHIO  RELATING  TO  BUILDING  ASSOCIATIONS. 

SECTION  3833.  A  corporation  organized  for  the  purpose  of 
raising  money  to  be  loaned  among  its  members  for  use  in  buying 
lots  or  in  building  and  repairing,  or  other  purposes,  may  levy, 


APPENDIX.  245 

assess,  and  collect  from  its  members  such  sums  of  money,  by 
rates  of  stated  dues,  fines,  interest  and  premiums  on  loans,  or 
may  otherwise  raise  money  as  the  corporation  by  its  constitution 
and  by-laws  shall  provide ;  and  it  may  acquire,  hold,  incumber 
and  convey  all  such  real  estate  and  personal  property  as  may  be 
legitimately  pledged  to  it  on  such  loans,  or  may  otherwise  be 
transferred  to  it  in  the  due  course  of  its  business ;  but  the  dues, 
fines  and  premiums  so  paid  by  its  members,  although  in  addition 
to  the  legal  rate  of  interest  on  loans  taken  by  it,  shall  not  be 
construed  to  make  the  loans  so  taken  usurious ;  and  no  person 
shall  hold  more  than  twenty  shares  in  any  such  corporation  in 
his  own  right. 

SEC.  3834.  Such  corporation  may  receive  on  deposit  all  sums 
of  money  offered  for  that  purpose,  on  such  terms,  and  at  such 
rates  of  interest,  not  exceeding  the  legal  rate,  as  may  be  pre- 
scribed by  the  board  of  directors,  and  loan  the  same  pursuant  to 
the  preceding  section. 

SEC.  3835a.  So  much  of  the  earnings  as  may  be  necessary 
shall  be  set  apart  to  defray  the  current  expenses  of  the  corpora- 
tion, and  a  portion  of  the  earnings,  to  be  determined  by  the 
board  of  directors,  shall  be  reserved  annually  or  semi-annually 
for  the  payment  of  contingent  losses,  and  the  residue  of  such 
earnings  or  dividends  shall  be  transferred  to  the  credit  of  all 
members,  to  be  paid  to  them  at  such  times,  and  in  such  manner, 
and  in  such  proportions  as  the  corporation  by  its  constitution 
and  by-laws  in  conformity  with  this  act  may  provide ;  and  upon 
the  cancellation  of  any  share  or  shares  that  have  been  fully  paid, 
the  corporation  shall  pay  to  such  member  or  members  their  pro 
rata  share  of  so  much  of  the  reserve  fund  as  has  been  accumu- 
lated during  the  membership  and  remains  therein  at  the  time  of 
the  termination  of  the  membership  of  such  member  or  mem- 
bers. 

SEC.  3835b.  Such  corporation  shall  be  authorized  to  provide 
in  its  constitution  and  by-laws,  rules  and  regulations,  for  the 
terms  of  membership ;  for  the  annual  subscribing  shares  of 
stock  therein;  for  an  annual  or  semi-annual  division  of  the 
earnings  of  the  dividends  or  earnings  among  the  members ;  for 
a  rebate  of  interest  at  the  end  of  each  year  on  the  amount  of 
dues  paid  on  loans ;  for  the  sale  of  money ;  for  the  time  and 


24:6  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

amount  of  the  payment  of  dues,  interest,  premiums,  fines,  and 
other  assessments;  for  the  withdrawal  of  non-borrowing  members, 
and  also  for  the  withdrawal  of  non-borrowing  members  of  part 
payments  on  their  shares  of  stock ;  for  the  cancellation  of  the 
securities  of  borrowing  members  upon  demand  being  made  by 
them  or  their  legal  representatives. 

SEC.  3835c.  All  adjustments  of  loans  between  such  corpora- 
tion and  its  borrowing  members  shall  be  upon  the  following 
terms,  to  wit :  After  the  premium  for  one  year  has  been  paid, 
and  also  the  interest  and  premium  on  such  loans  up  to  the  day 
of  settlement,  the  borrowing  member  shall  pay  to  the  corpora- 
tion an  amount  which,  added  to  the  dues  and  dividends  cred- 
ited, will  equal  the  sum  actually  borrowed ;  and  also  such  fines 
and  other  assessments  as  are  provided  for  by  the  constitution 
and  by-laws  of  such  corporation. 

SEC.  3835d.  The  stock  or  shares  of  individual  members  or 
depositors  of  such  corporation  shall  be  considered  and  held  as 
credits,  and  the  said  members  and  depositors,  individually,  shall 
list  for  taxation  the  number  of  shares  held  by  them,  and  the 
true  value  thereof  in  money,  on  the  day  preceding  the  second 
Monday  in  April  in  each  year,  and  the  same  shall  be  assessed  at 
such  valuation  and  taxes  as  other  property. 

SEC.  3835e.  Any  building  association,  after  at  least  three 
fourths  of  its  capital  stock  is  fully  subscribed  and  taken,  may 
increase  its  capital  stock  by  a  vote  of  its  board  of  directors,  a 
majority  of  the  members  of  such  board  of  directors  voting  in 
favor  thereof ;  and  a  certificate  of  such  action  of  the  board  of 
directors  shall  be  filed  with  the  Secretary  of  State. 

SEC.  3836.  All  shares  of  stock  held  in  such  corporations  by 
or  in  the  name  of  a  minor,  shall,  upon  application  therefor,  be 
paid  to  such  minor  or  persons  who  hold  such  shares  of  stock  for 
the  minor,  and  the  same  shall  be  valid  payment. 

Passed  May  8, 1886. 

(Ohio  Laws  V,  pp.  116, 117.) 


APPENDIX.  247 


FOKMS. 

No.  1. 

We  submit  the  following  as  a  form  for  suitable  by-laws  for 
an  association  incorporated  under  the  New  York  act  of  1887. 
They  are,  in  fact,  the  by-laws  of  the  Elmira  Co-operative  Sav- 
ings and  Loan  Association,  organized  in  1888,  and  were  drawn 
by  us  with  much  care ;  and  supplement  the  act  of  1887  in  those 
matters  left  to  the  discretion  of  the  association  by  the  act,  ac- 
cording to  our  conception  of  the  true  co-operative  savings  and 
loan  association.  They  can  be  readily  modified  to  meet  the 
wishes  of  those  who  may  differ  with  us  on  minor  details. 

The  certificate  of  incorporation  (see  form  in  Chapter  VII) 
fixes  the  name  and  place  of  doing  business,  hence  they  are  not 
given  in  the  by-laws. 


BY-LAWS  OP  THE  CO-OPERATIVE  SAVINGS  AND 

LOAN  ASSOCIATION. 

Officers. 

SECTION  1.  The  officers  of  this  association  shall  be  a  Presi- 
dent, Vice-President,  Treasurer,  Secretary,  a  Board  of  Directors, 
and  an  Attorney. 

SEC.  2.  The  Board  of  Directors  shall  consist  of  thirteen  mem- 
bers of  whom  nine  shall  be  elected,  and  the  President,  Vice- 
President,  Treasurer  and  Secretary  shall  be  ex-officio  members. 

SEC.  3.  The  Attorney  shall  be  appointed  and  removed  at 
pleasure  by  the  Board  of  Directors;  all  other  officers  shall  be 
elected  annually  by  ballot  by  the  stockholders.  In  case  of  va- 
cancies, the  Board  of  Directors  may  fill  the  same  until  the  next 
annual  election. 

SEC.  4.  The  President  shall  preside  at  all  meetings  of  the 
stockholders  and  of  the  Board  of  Directors ;  sign  all  certificates 
of  stock,  and  all  orders  upon  the  Treasurer  for  the  payment  or 
appropriation  of  moneys,  and  perform  all  other  duties  usually 
appertaining  to  such  office. 


24:8  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

SEC.  5.  The  Vice-President,  in  the  absence  or  disability  of 
the  President,  shall  perform  the  duties  of  President. 

SEC.  6.  The  Treasurer  shall  be  the  custodian  of  all  funds, 
securities,  contracts  and  deeds  belonging  to  the  association,  sub- 
ject however  to  the  direction  of  the  Board  of  Directors.  He 
shall  receipt  for  all  moneys  paid  to  him,  and  pay  all  orders  or 
drafts  upon  him,  ordered  by  the  Board  of  Directors  and  signed 
by  the  President  and  attested  by  the  Secretary.  He  shall  keep 
suitable  and  accurate  books  of  account  of  all  his  transactions, 
and  make  a  report  of  the  finances  of  the  association  at  each 
stated  meeting  of  the  Board  of  Directors,  which  report  shall  be 
filed  by  the  Secretary  and  entered  in  the  minutes  of  the  meet- 
ing. His  books  of  accounts  shall  be  subject  to  the  call  and  in- 
spection of  the  Board  of  Directors  at  any  time  and  shall  be  sub- 
ject to  the  inspection  of  any  stockholder  at  all  reasonable  hours. 
He  shall  give  a  bond  with  at  least  two  sureties,  one  or  more  of 
whom  shall  not  be  connected  with  the  bank  where  he  deposits 
the  funds  of  the  association,  in  an  amount  prescribed  by  the 
Board  of  Directors,  and  in  form,  and  with  sureties  and  the  suffi- 
ciency thereof,  subject  to  their  approval.  At  the  expiration  of 
his  term  of  office,  he  shall  deliver  to  his  successor  in  office, 
within  five  days  after  the  qualification  of  such  successor,  all 
moneys,  books  and  papers  of  the  association  in  his  possession. 

SEC.  7.  The  Secretary  shall  be  present  at  all  meetings  of  the 
stockholders  and  Board  of  Directors  in  person,  or  shall  have  a 
proxy  from  the  Board  of  Directors,  and  keep  correct  minutes  of 
the  proceedings,  which  shall  be  transcribed  into  a  suitable  min- 
ute-book and  read  at  the  next  meeting  for  the  approval  of  the 
Board.  He  shall  also  keep  a  stock  ledger  wherein  shall  appear 
a  minute  of  every  certificate  of  stock  issued  and  all  transfers 
until  surrendered ;  also  an  order-book,  showing  date,  the  amount, 
what  given  for,  and  the  payee  of  all  orders  attested  by  him ; 
also  a  security-book,  wherein  shall  appear  a  minute  of  all  secur- 
ities taken  by  the  association ;  also  a  dues,  interest  and  fine 
book,  wherein  shall  appear  the  amount  due  from  and  paid  by 
each  shareholder  at  each  meeting  for  the  receipt,  of  dues.  He 
shall  make  a  monthly  report  of  the  number  of  shares  outstand- 
ing, and  such  other  facts  as  the  Board  of  Directors  may  require. 
He  shall  make  a  detailed  report  of  the  business  of  the  associa- 


APPENDIX.  249 

tion  at  each  annual  meeting,  and  at  all  meetings  when  required 
by  the  Board  of  Directors  or  President.  His  books  shall  be 
open  for  inspection  by  any  stockholder  at  all  reasonable  hours. 
He  shall  have  charge  of  the  publications  and  the  correspondence 
of  the  association,  and  shall  deliver  to  his  successor  in  office, 
within  five  days  after  the  qualification  of  such  successor,  all 
books  and  papers  in  his  possession  belonging  to  the  association. 

SEC.  8.  A  Finance  Committee  of  three  members  shall  be 
appointed  by  the  President  from  the  nine  elected  members  of 
the  Board,  who  shall  serve  for  four  months ;  a  second  and  a 
third  committee  shall  be  appointed  in  the  same  manner  during 
the  year ;  such  committees  shall  be  so  arranged  -that  each  of 
said  nine  directors  shall  serve  upon  a  committee  for  four  months 
during  the  year.  The  President  and  Vice-President  shall  at  all 
times  be  members  ex  officio  of  this  committee. 

SEC.  9.  The  Attorney  shall  examine  the  abstracts  of  title, 
procured  from  the  County  Clerk,  to  all  real  estate  which  has 
been  offered  to  the  association  as  security  for  loans  and  approved 
by  the  Finance  Committee,  and,  if  found  satisfactory,  he  shall 
indorse  his  approval  thereon.  He  shall  prepare  all  securities 
given  to  the  association  and  cause  all  mortgages  to  be  recorded 
as  soon  as  delivered.  His  charges  for  such  services  shall  be  rea- 
sonable and  paid  by  the  borrower,  unless  the  Board  otherwise 
direct.  He  shall  meet  with  the  Board  of  Directors  when  re- 
quested, but  shall  have  no  vote. 

SEC.  10.  No  officer,  other  than  the  Treasurer,  Secretary,  and 
Attorney,  shall  receive  compensation  for  any  services  rendered 
by  him.  The  salaries  of  the  Treasurer  and  Secretary  shall  be 
fixed  by  the  Board  of  Directors.  The  Attorney  shall  not  be 
entitled  to  compensation  for  his  attendance  upon  the  ordinary 
stated  meetings  of  the  Board  of  Directors,  stockholders,  or 
Finance  Committee.  All  officers  and  committees  shall  be  en- 
titled to  all  expenses  necessarily  incurred  by  them  in  the  proper 
discharge  of  their  duties. 

SEC.  11.  The  Board  of  Directors,  by  a  two-thirds  vote,  shall 
have  power  to  suspend  any  officer  of  the  association,  for  cause, 
which  shall  be  stated  in  writing  and  served  upon  him  at  the 
time  of  such  suspension ;  whereupon  a  special  meeting  of  the 
stockholders  shall  be  called  to  consider  such  suspension,  and  at 
17 


250  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

such  special  meeting,  or  a  meeting  adjourned  therefrom,  the 
offending  officer  shall  be  reinstated  or  removed  by  a  majority 
vote  of  the  stock  represented  at  such  meeting. 

Meetings. 

SEC.  12.  The  annual  meetings  of  the  shareholders  of  the 
association  shall  be  held  on  the  first  Monday  evening  in  the 
month  of  February  in  each  year  for  the  election  of  officers  and 
the  transaction  of  the  b'usiness  of  the  association. 

SEC.  13.  Special  meetings  of  the  shareholders  shall  be  con- 
vened by  the  President,  at  the  written  request  of  ten  sharehold- 
ers. A  notice  of  such  meeting,  stating  the  time,  place,  and  busi- 
ness to  be  brought  before  the  meeting,  shall  be  mailed  by  the 
Secretary,  postage  prepaid,  to  each  shareholder,  at  his  post- 
office  address  as  it  appears  upon  the  books  of  the  association,  at 
least  five  days  before  the  date  of  such  meeting.  In  event  such 
special  meeting  is  desired  to  consider  the  suspension  of  the 
President,  such  special  meeting  shall  be  called  by  the  Secretary. 

SEC.  14.  The  stated  monthly  meeting  of  the  Board  of  Direct- 
ors shall  be  held  on  the  second  Monday  evening  in  each  month. 
The  Finance  Committee  of  the  Board  shall  meet  the  same  even- 
ing, from  seven  to  nine  o'clock,  to  receive  dues  and  any  other 
moneys  due  or  payable  to  the  association.  The  whole  Board 
shall  convene  immediately  following  the  receipt  of  dues,  etc., 
and  bidding  for  loans. 

SEC.  15.  Special  meetings  of  the  Board  of  Directors  may  be 
called  at  any  time  by  the  President,  and  shall  be  called  by  him 
on  the  written  request  of  three  directors.  At  least  twenty-four 
hours'  notice  of  a  special  meeting  of  the  Board  shall  be  given 
orally  by  the  Secretary,  or  by  leaving  a  written  notice  of  such 
meeting  at  the  business  place  or  the  residence  of  each  director. 

SEC.  16.  Five  members  of  the  Board  shall  constitute  a  quorum 
for  the  transaction  of  all  business,  except  the  suspension  of  an 
officer,  the  loaning  of  money  to  another  association,  and  the 
borrowing  of  money  by  the  association. 

SEC.  17.  The  Finance  Committee  shall  meet  at  seven  and 
one-half  o'clock  on  each  Friday  evening  following  the  monthly 
meeting  of  the  Board  of  Directors,  for  the  purpose  of  passing 
upon  the  sufficiency  of  the  securities  offered  for  the  loans  bid 


APPENDIX.  251 

off  at  such  monthly  meeting.    The  Secretary  and  Attorney  shall 
meet  with  the  Committee,  but  shall  have  no  vote. 

Stock,  Entrance  Fee,  and  Transfer  Fee. 

SEC.  18.  The  stock  of  the  association  shall  be  issued  in  yearly 
series,  and  each  shareholder  shall  be  entitled  to  a  certificate  of 
the  shares  of  stock  held  by  him  or  her,  issued  in  the  name  and 
under  the  seal  of  the  association,  and  signed  by  the  President 
and  Secretary.  The  series,  beginning  with  the  first  issued,  shall 
be  numbered  in  regular  order — one,  two,  three,  and  so  on — and 
the  certificate  shall  plainly  state  the  number  of  the  series  in 
which  the  shares  are  issued.  An  entrance  fee  of  twenty-five 
cents  shall  be  charged  for  each  share  of  stock  issued.  A  certifi- 
cate of  unpledged  shares  of  stock  may  be  transferred  by  assign- 
ment, in  person  or  by  attorney,  in  the  presence  of  the  President 
or  Secretary,  and  the  assignment  shall  be  minuted  upon  the 
stock-book  of  the  association  and  indorsed  upon  the  certificate, 
and  the  assignee,  by  signing  the  by-laws  and  paying  a  transfer 
fee  of  ten  cents  a  share,  shall  become  a  member  of  the  asso- 
ciation. 

SEC.  19.  A  certificate  of  stock  upon  which  a  loan  has  been 
made,  may  be  transferred  in  the  same  manner  as  in  the  last  sec- 
tion described,  subject  to  the  rights  of  the  association  in  the 
following  case :  First,  where  the  assignee,  in  case  of  a  real-estate 
loan,  has  purchased  the  mortgaged  property  and  assumed  the 
payment  of  the  mortgage ;  second,  where  the  loan  is  secured  by 
the  stock  transferred  and  the  assignee  assumes  the  payment  of 
the  loan  and  makes  his  bond  to  the  association  for  such  payment. 

Payment  of  Dues,  etc. 

SEC.  20.  At  the  request  of  the  Finance  Committee,  the  Secre- 
tary and  Treasurer  shall  aid  them  in  the  receipt  of  dues,  etc. 
One  member  of  the  Committee  at  the  time  the  dues  and  other 
payments  are  made  shall  receipt  for  the  same  in  a  pass-book, 
which  shall  be  given  to  the  shareholder  with  his  certificate  of 
stock ;  while  another  member  of  the  Committee  shall  check  off 
the  amount  paid  from  the  dues,  interest  and  fine  book  which 
the  Secretary  shall  have  at  such  meeting.  At  the  close  of  the 
meeting  for  the  receipt  of  dues,  etc.,  the  Committee  shall  turn 


252  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

over  the  funds  received  to  the  Treasurer  and  take  his  receipt 
therefor. 

SEC.  21.  The  Finance  Committee  or  any  other  officer  shall 
not  receive  dues  or  other  payments  due  the  association  at  any 
other  time  than  at  the  stated  meetings,  except  the  Treasurer 
may  receive  payments  of  loans  under  the  provisions  of  section 
ten  of  the  act  under  which  this  association  is  formed  and  incor- 
porated. 

SEC.  22.  Whenever  a  shareholder  shall  be  in  arrears  for  dues, 
interest  and  fines,  and  a  payment  shall  be  made  insufficient  to 
square  them  all,  the  payment  shall  first  be  applied  to  the  pay- 
ment of  the  fines,  and  second  to  dues  and  interest  in  equal 
parts. 

Fines. 

SEC.  23.  For  every  dollar  of  dues,  interest  and  fines  which  a 
shareholder  neglects  or  refuses  to  pay,  he  shall  pay  a  fine  of  ten 
cents  for  each  month  in  arrears.  In  the  case  of  the  death  of  the 
shareholder  his  estate  shall  not  be  chargeable  with  fines  for  non- 
payment of  dues  at  the  stated  monthly  meeting  of  the  Board 
immediately  following  such  death,  nor  shall  any  fines  be  im- 
posed in  such  case  at  any  subsequent  meeting  for  the  receiving 
of  dues  unless  the  personal  representatives  of  such  deceased 
shareholder  or  their  assigns  shall  elect  to  carry  the  shares  of 
stock  of  the  deceased  shareholder ;  but  such  shares  shall  be  with- 
drawn and  their  withdrawal  value  computed,  as  prescribed  in 
section  twenty-six  hereof,  to  the  date  of  such  death,  shall  be  due 
and  payable  to  his  personal  representatives  at  the  first  stated 
monthly  meeting  of  the  Board  following  the  service  of  a  written 
demand  therefor  upon  the  Secretary  or  as  soon  thereafter  as  the 
association  shall  have  funds  applicable  to  the  payment  of  with- 
drawing stock. 

SEC.  24.  The  successful  bidder  for  a  loan  at  the  stated  meet- 
ings shall  immediately  furnish  to  the  Board  a  written  descrip- 
tion of  the  security  which  he  proposes  for  his  loan.  The  same 
shall  pass  without  a  motion  to  the  Finance  Committee  unless 
the  Board  of  Directors  shall  by  a  unanimous  vote  decide  to  pass 
upon  the  sufficiency  of  the  security  offered  forthwith.  The 
Board  may  also  direct  that  the  Finance  Committee  report  to 
the  Board  for  their  determination  upon  the  sufficiency  of  the 


APPENDIX.  253 

security.  In  all  other  cases  the  Finance  Committee  shall  per- 
sonally examine  the  real  estate  offered  as  security  and  appraise 
the  value  thereof  before  the  time  fixed  for  their  meeting  to  pass 
upon  its  sufficiency  as  a  security  ;  and  if  at  their  meeting  they 
approve  of  the  security  as  to  its  value  and  the  Attorney  shall  ap- 
prove of  the  title,  the  loan  shall  be  made  without  further  action 
by  the  Board  of  Directors ;  and  when  the  mortgage  has  been 
placed  in  the  Clerk's  office  for  record,  the  President  shall  sign 
and  the  Secretary  shall  attest  and  deliver  an  order  upon  the 
Treasurer  for  the  amount  going  to  the  borrower  upon  his  loan. 
All  the  securities  for  the  loan  shall  thereupon  be  delivered  to 
the  Secretary,  who  shall  enter  the  same  at  once  in  the  security- 
book,  and  the  Secretary  shall  thereupon  deliver  the  same  with 
all  assignments  and  abstracts  of  title  and  insurance  papers  to 
the  Treasurer. 

SEC.  25.  Action  upon  security  offered  for  loans  shall  not  be 
had  by  the  Finance  Committee  or  by  the  Board  of  Directors  in 
the  presence  of  the  borrower.  If  a  borrower  shall  fail  to  offer 
satisfactory  security  for  his  proposed  loan  before  the  next  stated 
meeting,  his  right  to  a  loan  upon  his  bid  shall  be  forfeited  un- 
less the  Board  otherwise  direct. 

Dividends. 

SEC.  26.  The  Board  of  Directors,  at  a  meeting  held  subse- 
quent to  the  last  stated  monthly  meeting  in  the  fiscal  year  and 
before  the  annual  meeting,  shall  declare  a  dividend  distributing 
the  profits  since  the  last  dividend,  under  the  provisions  of  section 
fifteen  of  the  said  act  under  which  the  association  is  incorpo- 
rated. They  shall  also  at  said  meeting,  or  a  meeting  adjourned 
therefrom  and  held  before  the  annual  meeting,  determine  the 
withdrawal  value  of  the  shares  of  stock  until  the  next  distribu- 
tion of  profits.  In  determining  such  withdrawal  value  they 
shall  allow  to  all  shares  over  two  years  of  age  at  least  seventy- 
five  per  cent  of  the  profits  which  have  accrued  and  have  been 
added  to  the  value  of  the  shares  and  as  much  more  as  to  them 
shall  seem  wise.  They  shall  have  discretionary  power  to  make 
the  percentage  of  profits  withdrawn  uniform  upon  all  such 
shares  or  increase  the  same  as  the  shares  increase  in  age.  In 
the  case  of  shares  not  over  two  years  of  age  at  the  time  of  de- 


254  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

termining  the  withdrawal  value,  they  shall  allow,  in  lieu  of  a 
percentage  of  profits,  interest  upon  the  dues  paid  in  at  a  rate  of 
not  less  than  four  and  a  half  per  cent  per  annum.  Such  with- 
drawal value  shall  be  reported  at  the  annual  meeting,  and  take 
effect  on  the  date  of  the  first  monthly  meeting  thereafter ;  and 
upon  all  withdrawals  made  until  the  next  annual  meeting,  in 
addition  to  such  withdrawal  value,  interest  shall  be  paid  upon 
the  withdrawal  value  of  the  shares  and  upon  all  dues  paid  sub- 
sequent to  said  annual  meeting,  together  with  such  dues,  at  the 
rate  of  four  per  cent  per  annum. 

SEC.  27.  The  President  at  the  last  monthly  meeting  in  the 
fiscal  year  shall  appoint  an  auditing  committee  of  three  share- 
holders, who  are  not  officers,  to  examine  the  accounts  of  the 
Treasurer  and  Secretary  and  report  thereon  to  the  annual  meet- 
ing. He  shall  also  appoint  a  committee  of  three  stockholders, 
not  officers,  to  make  an  examination  of  their  accounts  at  any 
time  during  the  year  when  so  required  in  writing  by  ten  share- 
holders ;  and  he  may  appoint  such  committee  at  any  time  upon 
his  own  motion. 

SEC.  28.  No  officer  shall  have  power  to  make  an  expenditure 
or  incur  any  liability  on  behalf  of  the  association  without  au- 
thority given  therefor  by  the  Board  of  Directors. 

SEC.  29.  Every  order  drawn  upon  the  Treasurer  shall  be 
dated  when  made  and  state  the  payee  and  the  purpose  for  which 
it  is  drawn,  and  a  stub  from  which  the  order  shall  be  detached 
shall  contain  a  statement  of  the  same  facts. 

SEC.  30.  These  by-laws  may  be  altered  or  amended  at  any 
annual  or  special  meeting  of  the  shareholders  by  a  two-thirds 
vote  of  the  shareholders  present. 


No.  2. 

The  following  is  a  copy  of  the  by-laws  of  the  Guardian  Co- 
operative Bank  of  Boston,  Massachusetts.  D.  Eldridge,  Esq., 
its  Secretary  and  Treasurer,  and  one  of  the  most  conspicuous 
men  in  Massachusetts  at  this  time,  in  extending  this  form  of  co- 
operation and  insisting  upon  correct  methods  in  the  transaction 
of  their  business,  recommends  these  by-laws  as  proper  in  form 
and  matter  under  the  Massachusetts  law : 


APPENDIX.  255 

ARTICLE  I. 

NAME   AND  OBJECT. 

This  corporation  shall  be  known  by  the  name  of  "  The  Guard- 
ian Co-operative  Bank,"  and  its  object  shall  be  the  accumulation 
of  a  capital  in  money,  to  be  derived  from  savings  and  accumu- 
lations of  the  members  thereof,  to  be  paid  into  said  corporation 
in  fixed  periodical  installments,  and  the  lending  of  such  funds 
so  accumulated  to  its  members,  in  accordance  with  the  provis- 
ions of  chapter  one  hundred  and  seventeen  of  the  Public  Stat- 
utes of  the  year  eighteen  hundred  and  eighty-one  of  the  Legis- 
lature of  Massachusetts. 

AETICLE  II. 

CAPITAL   STOCK. 

The  capital  stock  of  the  corporation  (to  be  accumulated) 
shall  be  one  million  dollars,  and  shall  be  divided  into  shares  of 
the  ultimate  value  of  two  hundred  dollars  each,  which  shall  be 
issued  in  quarterly,  half-yearly,  or  yearly  series,  as  the  members 
may  determine. 

ARTICLE  m. 

LOCATION. 

This  corporation  shall  be  located  in  the  city  of  Boston,  Massa- 
chusetts, and  the  office  or  place  of  business  or  meeting  shall  be 
determined  by  the  Board  of  Directors. 

ARTICLE  IV. 

OFFICERS   AND   THEIE  DUTIES. 

SECTION  1.  The  officers  of  this  corporation  shall  consist  of  a 
President,  a  Vice-President,  a  Secretary,  who  shall  be  Clerk  of 
the  Corporation,  a  Treasurer,  and  fifteen  Directors,  all  of  whom 
shall  constitute  a  Board  of  Directors,  and  each  of  whom  must  be 
a  shareholder.  The  offices  of  Secretary  and  Treasurer  may  be 
held  by  one  and  the  same  person.  After  the  first  election  they 
shall  be  elected  by  the  shareholders  at  the  annual  meeting,  and 
shall  continue  in  office  and  perform  their  respective  duties  until 
their  successors  are  duly  elected.  In  case  of  vacancy  in  the 
office  of  President,  Vice-President,  Secretary,  or  Treasurer  by 
death,  resignation  or  otherwise,  the  remaining  members  of  the 
Board  of  Directors  shall  make  such  temporary  appointment  as 


256   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

may  be  absolutely  necessary  to  carry  on  the  business  of  the  cor- 
poration, and  immediately  call  a  special  meeting  of  the  share- 
holders for  the  purpose  of  electing  such  new  officer  or  officers 
as  may  be  necessary  to  fill  the  aforesaid  vacancy  or  vacancies 
for  the  unexpired  term.  All  other  vacancies  may  be  filled  by 
the  remaining  members  of  the  Board. 

SEC.  2.  The  Board  of  Directors  shall  have  the  general  manage- 
ment of  the  business  of  the  corporation.  They  shall  make  an  an- 
nual report  at  the  annual  meeting  of  the  affairs  of  the  corporation. 

SEC.  3.  The  President  shall  preside  at  all  regular  and  special 
meetings  of  the  corporation  and  of  the  Board  of  Directors.  The 
Vice-President  shall,  in  the  absence  of  the  President,  perform 
all  his  duties.  In  the  absence  of  the  President  and  Vice-Presi- 
dent, the  Board  of  Directors  may  elect  a  presiding  officer  pro 
tempore.  The  President  shall,  immediately  after  the  annual 
meeting,  nominate  from  the  Board  of  Directors,  subject  to  con- 
firmation separately  by  the  Board,  for  a  term  of  one  year,  two 
competent  persons  who  shall  constitute  a  Finance  Committee, 
and  the  first  named  of  whom  shall  be  chairman.  The  duties  of 
the  Finance  Committee  shall  be  to  examine  the  general  expense 
bills  of  the  corporation,  and,  if  necessary,  to  assist  the  Secretary 
in  receiving  *the  money  paid  at  the  regular  monthly  meetings, 
with  such  other  duties  as  the  President  may  designate.  The 
President  shall  also,  immediately  after  the  annual  meeting, 
nominate  from  the  Board  of  Directors,  subject  to  confirmation 
separately  by  the  Board,  for  a  term  of  one  year,  five  com- 
petent persons  who  shall  constitute  a  Security  Committee,  and 
the  first  named  of  whom  shall  be  chairman.  The  duties  of  the 
Security  Committee  shall  be  to  examine  the  real  estate  offered 
as  security  for  loans,  and  to  report  in  writing  as  to  its  value, 
and  whether,  in  their  opinion,  the  corporation  can  safely  loan 
the  amount  applied  for.  The  actual  expenses  of  the  Security 
Committee  shall  be  borne  by  the  corporation,  provided  that,  in 
case  of  more  than  ordinary  expenses,  the  borrower  shall  pay  a 
portion  thereof,  if  the  Board  of  Directors  grant  the  loan  condi- 
tioned upon  such  partial  payment  of  expenses.  The  personal 
examination  by  the  Security  Committee,  of  any  parcel  of  real 
estate  offered  as  security  for  loans,  may  be  omitted  by  special 
vote  of  the  Board  of  Directors. 


APPENDIX.  257 

No  member  of  the  Security  Committee  shall  make  official 
report  upon  any  property,  offered  as  security  for  a  loan,  in 
which  he  has  a  personal  interest. 

SEC.  4.  The  Secretary  shall  keep  correct  records  of  the  meet- 
ings of  the  corporation  and  of  the  Board  of  Directors.  He  shall 
receive  all  moneys  due  the  corporation,  and  pay  the  same 
promptly  to  the  Treasurer. 

He  shall  be  the  corporation's  book-keeper,  and  have  charge 
of  all  books  and  papers  necessary  to  the  performance  of  his 
duties,  and  shall  turn  over  to  his  successor  in  office  all  such 
books  and  papers  within  two  weeks  after  the  election  of  such 
successor.  He  shall  notify  the  directors  of  all  special  meetings 
of  the  Board,  and  all  shareholders  of  the  regular  and  special 
meetings  of  the  corporation.  Notice  of  all  regular  and  of  every 
special  meeting  of  the  corporation  shall  be  published  by  the 
Secretary  not  less  than  three  times,  one  being  a  Saturday,  in 
one  or  more  daily  newspapers  published  in  Boston,  the  first 
publication  thereof  to  be  not  less  than  one  week  previous  to 
such  meeting  Such  notice  shall  state  the  day,  hour,  place,  and 
business  of  such  meeting.  He  shall  prepare  the  annual  report 
for  the  Directors. 

He  shall  perform  such  other  duties  as  the  Board  of  Directors 
may  determine.  He  shall  receive  such  compensation  for  his 
services  as  the  Board  of  Directors  may  determine,  and  shall  be 
paid  the  same  in  monthly  installments.  He  shall  furnish  se- 
curity satisfactory  to  the  Board  of  Directors,  for  the  faithful 
performance  of  his  duties.  In  the  absence  of  the  Secretary 
from  a  monthly  meeting,  the  President  shall  appoint  a  Secre- 
tary pro  tempore. 

SEC.  5.  The  Treasurer  shall  receive  from  the  Secretary  all 
moneys  paid  to  the  corporation,  and  give  his  receipt  therefor. 
He  shall  pay  all  drafts  of  the  Secretary,  when  signed  by  the 
proper  officers.  He  shall  be  the  custodian  of  all  deeds,  mort- 
gages, mortgage-notes,  policies  of  insurance,  or  other  securities 
of  the  corporation,  except  his  own  bond,  which  shall  be  in  the 
custody  of  the  President.  He  shall  keep  a  correct  account  of 
all  moneys  received  and  paid,  and  shall  make  a  written  report  of 
the  same  at  each  monthly  meeting  of  the  Directors.  His  books 
shall  at  all  times  be  open  to  the  inspection  of  the  Directors. 


258  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

He  shall  furnish  security,  satisfactory  to  the  Board  of  Di- 
rectors, for  the  faithful  performance  of  his  duties.  He  shall 
receive  such  compensation  for  his  services  as  the  Board  of  Di- 
rectors may  determine. 

Upon  the  expiration  of  his  term  of  office,  or  in  the  event  of 
his  death,  or  his  resignation,  or  removal  from  office,  he,  or  his 
legal  representatives,  shall  deliver  to  his  successor  all  books, 
moneys,  papers,  and  other  property  of  the  corporation. 

SEC.  6.  The  Board  of  Directors  snail  appoint  an  attorney,  who 
shall  examine  all  titles  to  property  offered  as  security  for  loans, 
and  shall  prepare  all  papers  of  a  legal  nature  required  by  the 
corporation.  In  case  of  loans,  the  member  offering  security 
therefor  shall  pay  the  attorney's  fees,  whether  the  security  is 
accepted  or  rejected,  subject  to  decision  by  the  Board  of  Di- 
rectors in  case  of  dispute  as  to  the  amount  of  the  attorney's 

charges. 

AET1CLE  V. 

REGULAR   MEETINGS. 

The  annual  meeting  of  the  shareholders  shall  be  held  on  the 
first  Friday  in  June,  in  each  and  every  year,  at  half -past  seven 
o'clock,  p.  M.  Monthly  meetings  of  the  Board  of  Directors  shall 
be  held  on  the  first  Friday  in  each  and  every  month,  at  half- 
past  seven  o'clock,  p.  M.,  for  the  purpose  of  transacting  any  busi- 
ness that  may  be  necessary.  If  either  of  said  Fridays  shall  be  a 
legal  holiday,  or  observed  as  such,  the  meeting  may  be  held  on 
such  other  evening  of  the  same  week  as  the  Board  of  Directors 
may  designate,  provided  that  notice  of  the  change  shall  be  given 
at  the  next  preceding  monthly  meeting. 

The  shareholders  shall  meet  on  the  first  Friday  in  May,  in 
each  and  every  year,  at  half-past  seven  o'clock,  p.  M.,  for  the 
purpose  of  making  nominations  for  officers  and  Auditors  for  the 
ensuing  fiscal  year.  In  case  of  failure  on  the  part  of  the  share- 
holders to  nominate  a  sufficient  number  to  fill  the  various  offices 
(including  Auditors),  it  shall  then  become  the  duty  of  the  Board 
of  Directors  to  complete  the  list.  The  Secretary  shall  cause  the 
list  of  nominees  to  be  printed  for  use  as  ballots  at  the  annual 
meeting,  none  being  eligible  except  the  nominees. 

All  elections  shall  be  by  ballot,  and  no  member  shall  be  en- 
titled to  vote  at  any  election  who  has  not  been  a  member  one 


APPENDIX.  259 

month,  nor  shall  the  name  of  any  person  not  a  member  be 
placed  upon  the  list  of  nominees.  At  all  elections  a  check  list 
shall  be  used,  and  the  polls  shall  be  open  from  half-past  seven 
o'clock,  P.  M.,  to  nine  o'clock,  p.  M.,  and  be  in  charge  of  two  or 
more  members  appointed  by  the  presiding  officer.  No  share- 
holder shall  vote  by  proxy. 

ARTICLE  VI. 

SPECIAL   MEETINGS. 

A  special  meeting  of  the  shareholders  shall  be  called  by  the 
Secretary  upon  the  written  petition  of  ten  shareholders,  ad- 
dressed to  the  Board  of  Directors,  setting  forth  the  cause  for 
such  special  meeting,  provided  that  none  of  said  ten  members 
are  in  arrears  on  any  account,  and  provided  further,  that  each 
of  them  shall  have  been  a  shareholder  one  month,  and  provided, 
that  at  said  special  meeting,  if  called,  no  business  shall  be  trans- 
acted except  that  for  which  the  meeting  was  called  as  set  forth 
in  the  petition.  In  the  absence  of  the  President  and  Vice-Presi- 
dent  from  such  special  meeting,  the  shareholders  present  may 
appoint  a  presiding  officer  pro  tempore. 

Special  meetings  of  the  shareholders  may  be  called  by  the 
President,  or  by  the  Board  of  Directors. 

AETICLE  VII. 

QUORUM. 

Twenty-five  shareholders,  or  a  majority  of  the  actual  number 
of  shareholders  shall  constitute  a  quorum  in  special  or  regular 
meetings  of  the  corporation. 

Nine  members  or  a  majority  of  those  actually  in  office,  shall 
constitute  a  quorum  of  the  Board  of  Directors,  provided,  that 
moneys  may  be  received  and  loaned  at  the  monthly  meetings 
without  a  quorum  of  the  Directors. 

ARTICLE  VIII. 

AUDITORS. 

There  shall  be  three  Auditors  elected  annually  at  the  annual 
meeting,  to  serve  one  year.  Their  duties  shall  be  to  examine 
and  audit  the  books,  accounts  and  vouchers  of  the  Secretary  and 
Treasurer,  and  certify  as  to  the  correctness  of  the  same  at  or 


260  CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONa 

before  the  annual  meeting  next  following  their  election.  They 
shall  have  power  to  make  partial  or  special  reports  at  any  regu- 
lar monthly  meeting.  Vacancies  occurring  from  any  cause 
shall  be  filled  for  the  unexpired  term  by  the  Board  of  Directors, 
No  person  shall  serve  as  an  Auditor  and  Director  at  the  same 
time.  The  Directors  shall  appoint  Auditors  to  serve  until  the 
first  annual  meeting. 

ARTICLE  IX. 

SEAL. 

The  corporate  seal  shall  consist  of  the  name  and  location  of 
the  corporation,  and  the  date  of  its  charter,  the  whole  to  be 
surrounded  by  an  ornamental  circular  border.  It  shall  be  pro- 
duced by  a  single  impression  of  an  embossing  press.  It  shall 
be  in  the  custody  of  the  Treasurer,  and  he  shall  see  that  it  is 
affixed  to  all  official  papers  that  require  it. 

ARTICLE  X. 

FINES. 

In  default  of  the  monthly  payment  of  dues,  interest  or 
premiums,  the  shareholder  shall  be  subject  to  a  fine  of  two  cents 
per  month  upon  each  and  every  dollar,  or  fractional  part  thereof 
not  less  than  fifty  cents,  in  arrears. 

ARTICLE  XI. 

TRANSFER   FEES. 

One  or  more  shares  held  in  the  name  of  one  person  in  any 
one  series  of  stock,  may  be  transferred  to  another  person  upon 
payment  of  a  fee  of  twenty-five  cents  for  each  transfer. 

ARTICLE  XII. 

LC&NS   ON   REAL   ESTATE. 

Each  and  every  shareholder  is  entitled  to  a  loan  of  two 
hundred  dollars  upon  each  share  held  by  him  unpledged,  and 
not  in  arrears  on  any  account.  All  money  subject  to  loan  shall 
be  offered  at  competitive  sale  by  the  President  or  some  person 
designated  by  him,  at  each  regular  monthly  meeting  of  the 
Directors.  All  loans  shall  be  in  sums  of  fifty  dollars  or  its  mul- 
tiple and  all  interest  and  premiums  shall  be  payable  monthly  in 
advance.  Any  person  shall  forfeit  his  right  to  a  loan  if,  after 


APPENDIX.  2G1 

successfully  bidding  for  the  money,  he  shall  fail  to  furnish  sat- 
isfactory security  before  the  next  succeeding  monthly  meeting, 
provided  that  the  right  to  said  loan  may  be  continued  while  the 
interest  and  premium  are  actually  paid  in  advance. 

ARTICLE  XIII. 

SECURITY   FOR   REAL-ESTATE   LOANS. 

No  single  parcel  of  real  estate  shall  be  taken  as  security  for 
loans  to  two  or  more  members.  Two  or  more  parcels  of  real 
estate  may  be  taken  as  security  from  one  borrower. 

All  real  estate  taken  as  security  for  loans,  must  be  located  in 
the  State  of  Massachusetts.  No  borrower  shall  pledge  more  than 
one  series  of  shares  for  any  one  loan. 

ARTICLE  XIV. 

LOANS   ON  SHARES. 

Loans  on  shares  are  made  under  the  following  statutory  pro- 
vision :  "  The  shares,  without  other  security,  may  in  the  discre- 
tion of  the  directors  be  pledged  as  security  for  loans,  to  an 
amount  not  exceeding  their  value  as  adjusted  at  the  last  adjust- 
ment and  valuation  of  shares  before  the  time  of  the  loan." 

ARTICLE  XV. 

BIDS   FOR   LOANS. 

The  bids  for  loans  shall  be  in  sums  of  five  cents  or  its  multi- 
ple, per  share  per  month. 

No  sum  greater  than  $2,000  shall  be  taken  upon  one  bid. 
No  more  than  one  loan  shall  be  claimed  upon  one  bid. 

ARTICLE  XVI. 

INSURANCE. 

All  buildings  upon  real  estate  taken  as  security  for  loans 
shall  be  insured  against  fire  for  the  benefit  of  the  corporation  at 
the  expense  of  the  borrower.  All  policies  shall  be  in  the  cus- 
tody of  the  Treasurer,  and  he  shall  see  that  no  policy  is  suffered 
to  lapse. 

ARTICLE  XVII. 

WITHDRAWALS. 

Shares  may  be  withdrawn  upon  one  month's  notice,  when  the 
shareholder's  account  shall  be  settled  as  follows:  From  the 


262  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

amount  then  standing  to  the  credit  of  the  shares  to  be  with- 
drawn, there  shall  be  deducted  all  fines,  a  proportionate  part  of 
any  unadjusted  loss,  and  one  fourth  of  all  the  profits  which 
have  been  placed  to  the  credit  of  said  shares,  and  he  shall  be 
paid  the  balance.  A  notice  to  withdraw  shall  become  null  and 
void  if  not  acted  upon  within  two  months. 

ARTICLE  XVIII. 

RETIRING   OF   SHARES. 

When  in  the  discretion  of  the  Board  of  Directors  it  is  deemed 
expedient  to  retire  the  unpledged  shares  of  any  series,  (as  pro- 
vided by  statute)  notice  of  their  intention  to  do  so  shall  be  sent 
by  mail  to  each  holder  of  such  shares  one  month  prior  to  the 
retirement,  and  such  shareholders  shall  be  notified  by  mail  of 
the  result  of  the  drawing. 

ARTICLE  XIX. 

LOST  OR   STOLEN   PASS-BOOKS. 

In  case  a  pass-book  is  lost  or  stolen,  immediate  information 
of  the  same  must  be  given  to  the  Secretary.  As  the  officers  of 
this  corporation  may  be  unable  to  identify  every  shareholder, 
the  corporation  will  not  be  responsible  for  loss  sustained,  when 
the  shareholder  fails  to  notify  the  officers  that  his  pass-book 
has  been  lost  or  stolen,  if  his  shares  shall  be  fraudulently  with- 
drawn by  another,  provided,  that  in  case  of  the  alleged  loss  or 
theft  of  a  pass-book,  the  Finance  Committee  may  at  their  dis- 
cretion authorize  the  issue  of  a  duplicate,  or  may  authorize  the 
payment  of  the  shares  without  the  pass-book  if  withdrawn  in 
full,  but  may  in  either  case  require  a  bond  to  indemnify  the  cor- 
poration for  any  loss  it  may  sustain  on  account  of  the  lost  or 
stolen  pass-book. 

ARTICLE  XX. 

PRICE   OF   SHARES. 

The  price  of  the  shares  of  this  corporation  shall  be  as  fol- 
lows :  On  the  date  of  issue,  $1.00 ;  on  the  second  month,  $2.02  ; 
on  the  third  month,  $3.06  ;  on  the  fourth  month,  $4.12 ;  on  the 
fifth  month,  $5.20 ;  on  the  sixth  month,  $6.30 ;  provided  that 
shares  issued  to  qualify  a  borrower,  the  price  shall  be  $1.00, 
$2.00,  $3.00,  $4.00,  $5.00  and  $6.00  respectively. 


APPENDIX.  263 

ARTICLE  XXI. 
DISCHARGES  OF  MORTGAGES. 

Any  mortgage  held  by  this  corporation  may  be  discharged 
by  the  Secretary  or  the  Treasurer  upon  the  receipt  of  the 
amount  due  thereon,  provided  that  the  discharge  shall  be  ap- 
proved in  writing  by  one  Director. 

AETICLE  XXII. 

AMENDMENTS. 

These  by-laws  may  be  amended  by  a  two-thirds  vote  of  the 
members  present  and  voting  at  a  regular  or  special  meeting, 
provided,  that  the  proposed  amendments  shall  have  been  sub- 
mitted to  the  corporation  in  writing  at  a  meeting  held  at  least 
four  weeks  previous  to  action  on  the  same. 


No.  3. 

The  following  are  the  articles  of  association  or  constitution 
of  The  People's  Building  and  Loan  Association  of  the  town  of 
Harrison  in  New  Jersey. 

This  is  one  of  the  most  successful  associations  in  that  State. 
It  was  organized  in  1873,  and  adopted  the  serial  plan  of  issuing 
its  stock  in  August,  1874.  It  is  a  model  constitution  for  the 
scheme  which  it  embodies. 

CONSTITUTION. 
ARTICLE  I. 

TITLE  AND  OBJECT. 

This  association  shall  be  denominated  "  THE  PEOPLE'S  BUILD- 
ING AND  LOAN  ASSOCIATION  OF  THE  TOWN  OF  HARRISON."  Its 
object  is  to  provide  a  means  for  the  regular,  safe  and  profitable 
investment  of  the  savings  of  its  members ;  and,  by  these  savings, 
to  accumulate  a  fund  for  the  purpose  of  making  loans  to  stock- 
holders, whereby  they  may  be  enabled  to  build  or  provide  for 
themselves  dwelling-houses,  or  to  purchase  building-lots  or  other 
real  property. 


264:  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 
AETICLE  II. 

STOCKHOLDERS. 

SECTION  1.  The  members  of  this  association  shall  be  resi- 
dents of  the  United  States.  Minors  may  hold  stock  in  this 
association  by  guardians.  A  parent  procuring  stock  for  a  minor 
child  may,  during  the  minority  of  such  child,  represent  him  or 
her  in  all  the  rights  of  membership  except  that  of  holding  office. 
When  such  child  shall  have  attained  the  age  of  twenty-one 
years,  he  or  she  shall  be  dealt  with  as  the  absolute  owner  of  the 
stock  and  be  considered  a  member. 

SEC.  2.  A  payment  by  any  stockholder,  trustee,  guardian  or 
representative  for  a  minor,  of  one  or  more  installments  of  one 
dollar  on  a  share  of  stock  shall  constitute  such  stockholder, 
trustee,  guardian  or  representative  for  a  minor,  a  member  of 
this  association,  and  as  such  shall  be  subject  to  all  fines  and 
penalties  imposed  by  this  constitution,  and  entitled  to  all  the 
privileges  of  membership. 

SEC.  3.  Each  and  every  stockholder,  trustee,  guardian  or 
representative  for  a  minor,  for  each  and  every  share  of  stock 
held  by  him  or  her  in  this  association  shall  pay  the  sum  of  one 
dollar,  as  installments,  on  the  third  Tuesday  of  each  and  every 
month ;  these  payments  shall  be  made  to  the  Treasurer,  or  such 
other  person  or  persons  as  shall  from  time  to  time  by  the  laws 
or  regulations  of  this  association  be  authorized  to  receive  the 
same,  at  such  hour  as  provided  for  in  this  constitution,  and  at 
such  place  as  the  Board  of  Directors  shall  provide,  the  said  pay- 
ments to  continue  until  it  shall  be  ascertained  that  the  value  of 
the  whole  stock  of  their  respective  series  be  sufficient  to  divide 
to  each  share  of  stock  in  such  respective  series  the  sum  of  two 
hundred  dollars.  The  time  for  payments  for  each  month  shall 
terminate  as  soon  as  the  Secretary  shall  have  waited  on  all 
present  and  left  the  place  of  meeting. 

SEC.  4.  In  case  any  stockholder,  trustee,  guardian  or  repre- 
sentative for  a  minor  shall  neglect  or  refuse  to  pay  his  or  her 
monthly  dues,  each  and  every  such  person  so  neglecting  or  re- 
fusing shall  incur  a  monthly  fine  of  five  per  cent,  which  shall 
be  charged  on  all  sums  remaining  unpaid. 

SEC.  5.  In  case  any  stockholder  (not  having  taken  a  loan) 
shall  neglect  or  refuse  to  pay  his  or  her  monthly  installments 


APPENDIX.  265 

or  fines  for  the  space  of  six  months  each  and  every  stockholder 
so  neglecting  or  refusing  shall  be  tendered  by  the  Treasurer  the 
amount  of  installments  actually  paid  by  him  or  her,  without 
any  allowance  for  interest,  first  deducting  all  fines  and  forfeit- 
ures that  may  be  charged  against  him  or  her,  and  from  that 
time  he  or  he  shall  cease  to  be  a  member  of  this  association. 
Provided,  that  such  action  shall  not  be  taken  against  a  default- 
ing stockholder,  unless  he  or  she  shall  have  been  notified  by  the 
Secretary  one  month  previously. 

SEC.  0.  Any  non-borrowing  stockholder  wishing  to  withdraw 
from  this  association  may  do  so  by  giving  a  written  notice  to 
the  Secretary  five  days  prior  to  the  meeting  of  the  Board  of 
Directors,  which  shall  be  held  on  the  evening  of  the  third  Tues- 
day of  each  month,  of  such  intention  to  withdraw,  etc.  During 
the  first  year  of  his  or  her  respective  series  of  stock,  he  or  she 
shall  be  entitled  to  receive  the  actual  amount  of  installments 
paid  in,  less  any  fines  he  or  she  may  owe.  After  the  expiration 
of  the  first  year,  he  or  she  shall  receive  the  actual  amount  of  in- 
stallments paid  in,  less  any  fines  he  or  she  may  owe,  with  inter- 
est at  the  rate  of  four  per  cent  per  annum  ;  after  the  expiration 
of  the  second  year,  five  per  cent  per  annum  ;  after  the  expira- 
tion of  the  third  year,  six  per  cent  per  annum  ;  after  the  expira- 
tion of  the  fourth  year,  such  percentage  for  the  average  time  of 
investment  as  shall  be  shown  by  the  last  annual  report  to  be  the 
net  earnings  of  the  association,  less  the  following  percentage  of 
discount  off  said  net  earnings,  according  to  the  age  of  the  re- 
spective series  of  stock,  to  wit :  after  the  fourth  year,  thirty-five 
per  cent ;  after  the  fifth  year,  thirty  per  cent ;  after  the  sixth 
year,  twenty-five  per  cent ;  after  the  seventh  year,  twenty  per 
cent ;  after  the  eighth  year,  fifteen  per  cent ;  after  the  ninth 
year,  ten  per  cent ;  and  after  the  tenth  year,  and  until  the  re- 
spective series  mature,  five  per  cent.  It  is  provided,  however, 
that  at  any  time  not  more  than  one  half  of  the  monthly  receipts 
shall  be  appropriated  to  such  redemption  of  stock  without  the 
consent  of  the  Board  of  Directors. 

SEC.  7.  Upon  the  death  of  a  stockholder  who  has  not  re- 
ceived a  loan  or  loans,  his  or  her  legal  representatives  shall  be 
entitled  to  receive  from  this  association  the  actual  amount  of 
installments  paid  in  on  his  or  her  stock,  less  any  fines  he  or  she 
18 


266  CO-OPERATIVE  SAVINGS  AND   LOAN  ASSOCIATIONS. 

may  owe,  with  interest  added  to  the  same,  at  rates  in  accord- 
ance with  section  six  of  this  article ;  then  his  or  her  interest  in 
this  association  shall  terminate,  unless  the  legal  representatives 
of  such  deceased  shall  continue  the  payments  of  installments  on 
such  stock  for  three  months  after  his  or  her  decease,  thereby 
assuming  the  future  payments  on  the  stock. 

SEC.  8.  When  it  shall  be  ascertained  through  the  Auditors 
that  the  value  of  each  share  of  stock  in  any  series  amounts  to 
two  hundred  dollars,  a  meeting  of  the  stockholders  in  such 
series  shall  be  convened,  at  which  time  a  division  shall  take 
place ;  every  stockholder  of  the  matured  series  shall  receive  the 
sum  of  two  hundred  dollars  for  each  share  of  stock  held  by  him 
or  her  in  such  series,  or  his  or  her  securities  of  that  amount  with 
the  same  fully  satisfied  and  canceled  off  record,  and  then  that 
series  shall  cease  and  determine. 

ARTICLE  III. 

SERIES   OF   STOCK  AND   DISTRIBUTION   OF   EARNINGS. 

SECTION  1.  A  new  series  of  stock  may  be  commenced  on  and  at 
the  annual  meeting  of  the  association,  held  on  the  third  Tuesday 
of  September  in  every  year ;  provided  the  same  be  determined 
on  by  the  Board  of  Directors  at  least  one  month  prior  to  the  an- 
nual meeting  of  the  association,  and  public  notice  given  thereof. 

SEC.  2.  It  shall  be  the  duty  of  the  Secretary  to  assist  the 
Auditors  in  settling  and  adjusting  the  accounts  of  the  associa- 
tion, and  determining  the  value  of  the  shares  in  each  respective 
series  prior  to  the  annual  meeting,  or  at  any  other  time,  as  occa- 
sion may  require ;  and,  in  order  that  no  series  of  stock  may  be 
given  a  greater  percentage  of  the  earnings  of  the  association 
than  is  due  thereto,  they  shall  distribute  the  net  earnings  of  the 
association  and  determine  the  value  of  the  shares  in  accordance 
with  the  following  rules :  Each  series'  investment  to  be  multi- 
plied by  the  average  time  invested,  the  results  to  be  added  to- 
gether for  a  sum  of  results,  each  result  to  be  multiplied  by  the 
total  net  earnings  of  the  association,  the  product  divided  by  the 
sum  of  results,  the  quotient  in  each  case  showing  each  series' 
share  of  the  net  earnings.  Divide  each  series'  share  of  the  net 
earnings  by  the  number  of  shares  in  that  series  and  the  result 
will  be  the  net  gain  per  share. 


APPENDIX.  267 

ARTICLE  IV. 

CERTIFICATES  OF   STOCK. 

Each  stockholder  shall  be  entitled  to  a  certificate  of  stock 
issued  in  the  name  of  the  association  under  the  corporate  seal 
thereof,  signed  by  the  President  and  attested  by  the  Secretary ; 
which  certificate  may  be  transferred  by  assignment  in  person  or 
by  attorney  in  presence  of  the  Secretary,  and  shall  be  recorded 
in  the  proper  book  kept  by  the  Secretary  for  that  purpose,  and 
indorsed  on  the  certificate,  which  shall  be  surrendered  and  a  new 
one  issued  therefor  to  the  party  to  whom  transferred.  It  is 
provided,  however,  that  no  stock  shall  be  transferred  while  any 
fines,  installments,  or  other  liens  remain  charged  against  the 
same,  nor  until  the  tranferree  shall  have  assumed  all  the  obliga- 
tions of  the  original  stockholders. 

ARTICLE  V. 

OFFICERS. 

The  officers  of  this  association  shall  be  a  President,  Vice- 
President,  Treasurer,  Secretary,  eleven  Directors,  and  three 
Auditors,  all  of  whom  must  be  stockholders. 

ARTICLE  VI. 

PRESIDENT. 

The  President  shall  be  elected  by  the  stockholders  at  the 
annual  meeting.  It  shall  be  his  duty  to  preside  at  all  meetings 
of  this  association,  and  of  the  Board  of  Directors,  to  preserve 
order  therein,  to  sign  all  orders  on  the  Treasurer  for  the  pay- 
ment of  money  when  ordered  by  the  Board  of  Directors,  and  to 
perform  all  other  duties  usually  appertaining  to  the  office  of 
President.  It  shall  be  his  duty,  when  so  ordered  by  the  Board 
of  Directors,  to  give  releases  and  acquittances  for  all  moneys 
which  shall  be  paid  to  the  association  upon  any  bond,  bill,  note, 
mortgage,  or  other  security,  and,  if  necessary,  acknowledge  satis- 
faction of  the  same  on  record. 

ARTICLE  VII. 

VICE-PRESIDENT. 

The  Vice-President  shall  be  elected  by  the  stockholders  at 
the  annual  meeting.  It  shall  be  his  duty,  in  the  absence  of  the 


268  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

President,  to  preside  at  all  meetings  of  the  stockholders  and  of 
the  Board  of  Directors,  and  discharge  all  duties  appertaining  to 
the  office  of  President.  It  shall  be  his  duty,  in  the  event  of  the 
death  or  resignation  of  the  President,  to  perform  all  the  duties 
of  that  office  until  the  next  succeeding  annual  meeting. 

It  shall  also  be  his  duty  to  keep  a  book  in  which  he  shall 
record  the  names  of  all  persons  who  pay  money  into  the  treas- 
ury, and  the  amount  which  each  person  paid. 

AKTICLE  VIII. 

TREASURER. 

The  Treasurer  shall  be  elected  by  the  Board  of  Directors. 
His  duty  shall  be  to  receive  all  money  paid  into  the  association 
from  all  sources  whatsoever ;  to  deposit  the  same  to  the  account 
of  the  association  in  a  regular  bank  of  deposit  designated  by  the 
Board  of  Directors,  and  to  pay  all  orders  drawn  upon  the  Treas- 
urer by  order  of  the  Board  of  Directors,  when  signed  by  the 
President  and  attested  by  the  Secretary,  the  said  orders  to  be 
paid  by  checks  drawn  on  the  said  bank,  and  the  said  checks  to 
be  signed  by  himself,  together  with  the  President  and  Secretary, 
with  the  seal  of  the  association  stamped  thereon.  It  shall  also 
be  his  duty  to  receive  and  hold  in  trust  for  the  association  all 
bonds,  mortgages,  and  other  securities  on  which  money  may  be 
loaned  by  the  association.  He  shall  give  bond  with  such  secur- 
ity and  for  such  sum  as  the  Board  of  Directors  may  direct,  for 
the  faithful  performance  of  his  duties,  and  at  the  expiration  of 
his  office  he  shall  deliver  all  money,  bonds,  mortgages,  bills, 
notes,  books,  papers,  and  all  other  property  belonging  to  the 
association  in  his  possession,  or  under  his  control,  to  his  suc- 
cessor in  office. 

ARTICLE  IX. 

SECRETARY. 

The  Secretary  shall  be  elected  by  the  Board  of  Directors.  It 
shall  be  his  duty  to  keep  accurate  minutes  of  the  proceedings  of 
this  association  and  of  the  Board  of  Directors,  to  record  the 
same  in  books  to  be  kept  for  that  purpose.  He  shall  keep  accu- 
rate accounts  with  all  the  stockholders,  and  attest  all  orders 
drawn  on  the  Treasurer  for  the  payment  of  money  when  so 
ordered  by  the  Board  of  Directors,  and  also  keep  all  policies  of 


APPENDIX.  269 

insurance  transferred  to  the  association  as  collateral,  and  see 
that  they  are  kept  renewed.  He  shall  (at  the  expense  of  the 
association)  notify  the  stockholders  of  the  annual  meetings  by 
public  notice  conspicuously  placed  and  advertisement  in  a  news- 
paper published  in  the  town.  He  shall  be  prepared  at  all  times 
to  inform  the  stockholders  of  the  state  of  the  financial  concerns 
of  the  association,  and  at  the  yearly  meetings  furnish  a  detailed 
statement  of  the  finances.  He  shall  receive  such  salary  as  the 
Board  of  Directors  may  direct.  At  the  expiration  of  his  term 
of  office,  he  shall  deliver  all  books,  papers,  and  property  belong- 
ing to  the  association  in  his  possession  to  his  successor  in  office. 
It  shall  be  his  duty  at  each  regular  meeting  of  the  Board  of 
Directors  to  present  to  said  Board  a  list  of  all  premiums  on 
policies  of  insurance  held  as  collateral  security  by  this  associa- 
tion, that  may  be  coming  due  during  the  subsequent  month, 
and  it  shall  be  the  duty  of  the  Board  of  Directors  to  order  a 
draft  issued  on  the  Treasurer  for  a  sum  of  money  sufficient  to 
pay  such  premiums,  unless  the  same  shall  have  been  paid  by  the 
owners,  or  agents  of  such  owners ;  and  the  renewals  of  such 
policies  as  shall  be  so  paid  by  the  Secretary  shall  be  his  vouch- 
ers for  the  amount  paid  by  him,  and  the  balance,  if  any,  he  shall 
pay  into  the  treasury  of  this  association. 

ARTICLE  X. 

DIRECTORS. 

SECTION  1.  The  Directors,  together  with  the  President  and  Vice- 
President,  shall  constitute  the  Board  of  Directors.  The  Directors 
shall  be  elected  by  the  stockholders  at  the  annual  meeting  of 
the  association.  Immediately  after  the  first  election  they  shall 
meet  and  divide  themselves  into  three  classes,  and  draw  lots  for 
one,  two  and  three  years.  Those  drawing  one  year  shall  have 
their  places  supplied  at  the  next  annual  election ;  those  drawing 
two  years,  shall  have  their  places  supplied  at  the  second  annual 
election  thereafter ;  and  those  drawing  three  years,  shall  have 
their  places  supplied  at  the  third  annual  election  thereafter. 
At  each  succeeding  election,  Directors  shall  be  chosen  to  supply 
the  places  of  those  whose  terms  expire. 

SEC.  2.  The  Board  of  Directors  shall  meet  regularly  on  the 
third  Tuesday  in  each  and  every  month  at  such  place  as  they, 


270  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

or  a  majority  of  them,  shall  appoint,  to  receive  from  the  stock- 
holders their  monthly  installments,  interest  and  fines,  and  pay 
the  same  into  the  treasury ;  to  loan  out  the  funds  and  see  to 
their  safe  investment,  and  to  attend  to  the  financial  concerns  of 
the  association  generally.  But  if  there  be  no  quorum  present, 
then  any  three  or  more  of  the  Directors  in  attendance  shall  be 
authorized  to  receive  the  aforesaid  monthly  installments,  interest 
and  fines,  and  offer  the  money  for  loan  as  specified  in  Article 
XIII,  section  one. — The  Board  of  Directors  shall  also  meet  on 
the  evening  of  the  second  Monday  following  the  regular  meet- 
ing, for  the  purpose  of  transacting  such  other  business  of  the 
association  as  may  be  necessary. 

SEC.  3.  The  time  of  the  meetings  of  the  Board  of  Directors 
from  the  first  of  May  to  the  first  of  September,  inclusive,  in 
each  and  every  year,  shall  be  8  o'clock,  p.  M.,  and  during  the 
other  months  of  the  year,  7.30  o'clock,  p.  M. 

SEC.  4  A  quorum  shall  consist  of  not  less  than  seven.  The 
President  or  any  Director  being  absent  without  sufficient  excuse 
for  three  monthly  meetings  successively,  his  office  as  President 
or  Director  shall  be  declared  vacant. — The  Board  shall  have 
power  to  fill  all  vacancies  that  may  occur  until  the  next  annual 
meeting.  In  case  of  the  absence  of  the  President  and  Vice- 
President,  the  Directors  shall  have  power  to  elect  a  President 
pro  tempore.  Officers  of  their  own  appointment  may  be  removed 
by  them  at  pleasure. 

SEC.  5.  It  shall  be  the  duty  of  the  Board  of  Directors  to  pur- 
chase at  foreclosures  any  property  mortgaged  to  the  associa- 
tion, if  such  action  shall  be  considered  by  them,  or  a  majority 
of  them,  for  the  benefit  of  the  association. 

AETICLE  XI. 

AUDITORS. 

The  Auditors  shall  be  elected  by  the  stockholders  at  the 
annual  meeting  of  the  association.  Immediately  after  the  first 
election  they  shall  meet  and  draw  lots  for  their  terms  of  office^ 
viz.,  for  one,  two  and  three  years,  respectively.  The  one  draw- 
ing for  one  year  shall  have  his  place  supplied  at  the  next  annual 
election;  the  one  drawing  for  two  years  shall  have  his  place 
supplied  at  the  second  annual  election ;  and  the  one  drawing  for 


APPENDIX.  271 

three  years  shall  have  his  place  supplied  at  the  third  annual 
election.  At  each  succeeding  annual  election  Auditors  shall  be 
chosen  by  the  stockholders  to  supply  the  places  of  those  whose 
terras  expire,  or  of  a  vacancy  in  an  unexpired  term. 

Their  duty  shall  be  to  settle  and  adjust  the  accounts  of  the 
association  prior  to  the  annual  meeting,  and  to  report  to  the 
stockholders  with  a  faithful  and  ample  exhibit  of  the  financial 
affairs  of  the  association,  the  state  of  the  treasury  and  the  value 
of  the  shares ;  which  exhibit  they  shall  have  printed  at  the  ex- 
pense of  the  association. 

In  the  event  of  their  neglect  or  refusal  to  furnish  to  the 
stockholders  at  their  annual  meeting  a  detailed  exhibit  of  the 
finances,  as  hereinbefore  provided,  they  shall  be  fined  five  dollars 
each. 

They  shall  have  power  at  any  time  to  inspect  the  accounts 
of  the  Treasurer  and  Secretary,  and  upon  five  days'  due  notice 
call  a  meeting  of  the  stockholders. 

They  shall  have  power  to  fill  any  vacancy  that  may  occur  in 
their  number,  until  the  next  annual  election ;  but  in  the  event 
of  their  inability  to  agree  upon  a  choice,  the  vacancy  shall  be 
filled  by  the  Board  of  Directors. 

They  shall  superintend  all  elections  but  theirs,  (which  shall 
be  conducted  by  a  committee  from  the  Board  of  Directors). 

ARTICLE  XII. 

SOLICITOR. 

The  Board  of  Directors  shall  appoint  a  solicitor  for  the  asso- 
ciation who  shall  examine  all  title  deeds,  and  make  the  necessary 
searches  for  ascertaining  the  title  to  all  property  offered  to  this 
association  as  mortgage  security,  and  give  his  written  opinion 
thereon.  He  shall  prepare  all  bonds,  mortgages,  agreements  and 
all  other  writings  to  be  taken  or  given  by  this  association  in 
the  course  of  its  business,  and  also  transact  all  other  law  busi- 
ness of  this  Association  whenever  required  by  the  Board  of 
Directors,  for  which  he  shall  receive  a  fair  compensation. 

His  charges  for  fees  and  disbursements  in  making  searches, 
recording  and  proving  papers,  for  preparing  all  mortgages  and 
other  written  instruments,  and  for  examining  papers,  titles  and 
other  matters,  shall  be  borne  by  the  party  applying  for  the  loan. 


272   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

He  is  required  to  give  such  security  for  the  faithful  perform- 
ance of  his  duties  as  the  Board  of  Directors  shall  determine.  In 
all  disputes  as  to  the  amount  of  his  charges,  the  same  shall  bo 
determined  by  the  Board  of  Directors. 

AETICLE  XIII. 

LOANS. 

SECTION  1.  "Whenever  and  as  often  as  the  sum  of  two  hundred 
dollars  may  be  in  the  treasury,  it  shall  be  loaned  out  in  open 
meeting,  at  auction,  to  the  highest  bidder ;  providing,  however, 
the  said  money  shall  not  be  sold  at  less  than  one  per  cent  pre- 
mium. Every  stockholder  who  is  not  in  arrears  with  his  or  her 
monthly  installments,  interest  and  fines,  shall  be  entitled  to  re- 
ceive a  loan  of  two  hundred  dollars,  less  the  premium  bid  by 
him  or  her,  for  each  share  of  stock  held  by  him  or  her  in  this 
association. 

SEC.  2.  In  addition  to  the  premium  bid  for  a  loan  (which 
must  be  paid  or  deducted  from  the  amount  of  the  loan  at  or 
before  receiving  the  same),  every  stockholder  shall  be  held  as 
contracting  to  pay  all  taxes  that  may  be  assessed  at  any  time 
upon  said  loan. 

SEC.  3.  Whenever  a  stockholder  shall  be  declared  to  be  en- 
titled to  a  loan  or  loans,  and  before  receiving  the  same,  he  or 
she  shall  secure  the  payment  thereof  to  the  association  by  a 
bond  and  mortgage  for  the  full  amount  of  the  sum  loaned, 
and  for  the  payment  of  such  fines  as  may  be  imposed  for  the 
failure  of  paying  installments  and  interest  when  due,  and  by  the 
deposit  of  the  policy  of  fire  insurance,  and  for  every  loan  of  two 
hundred  dollars  made  to  a  stockholder  at  least  one  share  of 
stock,  of  the  series  in  which  he  or  she  shall  borrow,  shall  be 
assigned  as  collateral  security  to  said  bond  and  mortgage.  In 
case  of  failure  to  give  satisfactory  security  for  each  loan  within 
one  month,  the  month's  interest  shall  be  charged  to  the  borrower 
and  the  loan  revert  to  the  association.  No  money  shall  be 
loaned  on  any  property  already  incumbered.  Each  stockholder 
shall  be  entitled  to  borrow  to  the  full  amount  of  his  or  her 
shares  actually  held  by  him  or  her  at  that  time ;  and  in  case 
there  should  not  be  a  sufficient  amount  in  the  hands  of  the 
Treasurer,  he  or  she  will  be  entitled  to  the  balance  of  their 


APPENDIX.  273 

loans  at  the  same  rate  from  the  first  money  that  comes  into  the 
treasury. 

SEC.  4.  It  shall  be  the  duty  of  the  President  to  sell  the 
money  in  the  treasury,  in  the  manner  aforesaid  in  section  one 
of  this  article,  at  a  regular  monthly  meeting.  Loans  shall  be 
granted  to  such  stockholders  as  shall  offer  or  bid  the  highest 
premiums  therefor. 

SEC.  5.  Each  stockholder  of  this  association  on  receiving  a 
loan  or  loans  therefrom,  shall  be  entitled  to  a  deduction  on  the 
premium  bid,  of  one  tenth  for  each  and  every  full  year  that  has 
expired  since  the  series  of  stock  in  which  he  or  she  borrows  was 
issued. 

SEC.  6.  Stockholders  taking  loans  from  this  association  shall 
pay  interest  monthly  to  the  Treasurer  at  the  rate  of  one  half  of 
one  per  cent  per  month.  Borrowers  refusing  or  neglecting  to 
pay  the  interest  on  their  loans  shall  incur  a  monthly  fine  of  five 
per  cent  for  each  monthly  neglect  on  each  loan  of  two  hundred 
dollars  by  them  held.  If  the  interest  is  suffered  to  remain  un- 
paid more  than  six  months,  the  Board  of  Directors  may  compel 
payment  of  principal  and  interest  by  ordering  proceedings  on 
the  bond  and  mortgage  according  to  law. 

SEC.  7.  Stockholders  shall  be  entitled  to  borrow  to  the 
amount  of  their  installments  actually  paid  in,  after  the  series  in 
which  they  shall  borrow  shall  have  been  issued  at  least  one  year, 
on  their  bond  with  interest  for  the  same,  and  on  transferring 
their  stock  to  the  association  as  security ;  and  in  case  any  stock- 
holders borrowing  upon  their  bond  shall  neglect  or  refuse  to 
pay  their  installments,  interest  and  fines  for  the  space  of  six 
months,  then  the  stock  transferred  to  the  association  shall  be 
forfeited. 

SEC.  8.  No  security  for  a  loan  or  loans  shall  be  deemed  suffi- 
cient unless  approved  of  by  at  least  two  thirds  of  the  directors 
present  at  a  meeting  of  the  Board. 

SEC.  9.  Any  borrower  who  is  not  in  arrears  to  the  association 
may  repay  a  loan  at  any  time,  and,  in  case  of  the  repayment 
thereof  before  the  expiration  of  the  eighth  year  after  the  series 
in  which  his  or  her  stock  was  issued,  such  borrowers  shall  be  al- 
lowed the  following  credit,  viz.,  the  amount  of  installments  actu- 
ally paid  into  the  association  on  the  respective  series,  and  one 


274:  CO-OrERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

eighth  of  the  premium  paid  for  said  loan  for  every  full  year  of 
the  said  eight  years  unexpired,  together  with  whatever  interest 
he  or  she  may  be  entitled  to  receive,  as  provided  in  Article  II, 
section  six.  Provided,  that  notice  of  such  repayment  shall  be 
given  in  like  manner  as  provided  for  stockholders  withdrawing. 
SEC.  10.  This  association  shall  have  power  to  insure  all 
buildings  upon  which  loans  are  made,  and  also  to  renew  the 
same  and  collect  the  amount  paid  therefor,  in  the  same  manner 
and  with  like  fines  as  installments  and  interest  are  collected  un- 
less the  mortgageors  shall  give  policies  thereon  and  keep  the 
same  renewed  in  good  and  responsible  insurance  companies. 

AKT1CLE  XIV. 

REDEMPTION   OF   STOCK. 

In  the  event  of  the  money  in  the  treasury  of  the  association 
not  selling  at  or  over  one  per  cent  premium,  in  accordance  with 
Article  XIII,  section  one,  the  Board  of  Directors  shall  retain 
the  same  in  the  treasury  until  the  next  regular  monthly  meet- 
ing, when  it  shall  be  applied  to  the  redemption  of  stock  in  the 
oldest  series  and  in  the  following  manner :  They  shall  authorize 
the  Secretary  to  notify  the  stockholders  in  the  said  series  of 
their  intention  of  redeeming  such  number  of  shares  as  the 
money  in  the  treasury  will  permit  and  of  the  time  and  place  of 
meeting. 

At  the  meeting  so  held,  the  present  value  of  the  shares  in 
said  series  shall  be  announced  by  the  Secretary,  whereupon  the 
President  shall  proceed  to  receive  from  the  stockholders  pres- 
ent, by  auction,  bids  of  premium  on  the  announced  value  of  the 
stock ;  and  the  stockholder  bidding  the  highest  premium  shall 
be  entitled  to  receive  the  announced  value  of  his  or  her  shares  of 
stock  redeemed,  less  the  rate  of  premium  bid.  For  each  share 
of  stock  so  redeemed,  the  stockholder  selling  the  same  shall  sur- 
render to  the  association  his  or  her  certificate  of  stock. 

AETICLE  XV. 

MEETINGS. 

Meetings  of  the  stockholders  shall  be  held  on  the  third  Tues- 
day in  September  in  each  and  every  year.  Twenty  members 
shall  constitute  a  quorum.  Special  meetings  shall  be  called  by 


APPENDIX.  275 

* 

the  Secretary  when  requested  by  ten  members,  but  the  object  of 
such  meeting  so  called  must  be  inserted  in  the  notice. 

AETICLE  XVI. 

ELECTIONS. 

The  annual  election  for  officers  shall  be  held  on  the  third 
Tuesday  of  September  of  every  year,  and  one  week's  notice  of 
the  place,  object  and  time  of  meeting  shall  be  given  by  the  Secre- 
tary as  hereinbefore  provided.  Each  member  present  at  an 
election  shall  be  entitled  to  one  vote.  No  stockholder  shall  be 
eligible  to  office  nor  entitled  to  vote  until  he  or  she  shall  have 
been  at  least  three  months  a  member. 

AETICLE  XVII. 

FINES. 

All  officers  neglecting  to  attend  any  annual  meeting  shall  be 
fined  one  dollar  each. 

The  Treasurer  (or  deputy)  for  non-attendance  at  any  month- 
ly meeting  shall  be  fined  fifty  cents. 

The  Secretary  forfeits  five  dollars  for  neglecting  to  pay  pre- 
miums on  any  insurance  policy  which  is  not  paid  by  the  owner. 

The  Secretary,  for  neglecting  to  attend  any  meetings  of  the 
Board  of  Directors  or  of  the  stockholders,  shall  be  fined  one  dol- 
lar. All  fines  shall  be  charged  by  the  Secretary  with  the  month- 
ly dues  or  deducted  from  the  salary  or  compensation  of  such 
officers  as  receive  any  at  the  time  of  receiving  the  same. 

AETICLE  XVIII. 

BY-LAWS. 

The  Board  of  Directors  may  enact  by-laws  for  their  own  gov- 
ernment not  repugnant  with  this  Constitution. 

AETICLE  XIX. 

PLACE   OF   MEETING. 

The  Board  of  Directors,  or  a  majority,  are  to  select  a  place  of 
meeting  for  themselves  and  the  association. 

AETICLE  XX. 

This  constitution  shall  not  be  altered  or  amended  except  at 
an  annual  or  special  meeting,  of  which  due  notice  shall  have 


276   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

been  given,  and  by  a  vote  of  two  thirds  of  the  stockholders 
present. 

AETICLE  XXI. 

SALARIES   AND   EXPENSES. 

The  salaries  and  fees  of  officers  of  this  association  shall  be 
fixed  by  the  Board  of  Directors.  All  other  expenses  incurred 
for  books,  printing,  etc.,  must  be  sanctioned  by  the  Board  of 
Directors. 


No.  4. 

NEW  YORK.    MORTGAGE. 

Form  of  Mortgage  to  be  taken  by  an  Association  organized 
under  the  Act  of  1887. 

This  INDENTURE  made  this day  of ,  in  the  year 

of  our  Lord  one  thousand  eight  hundred  and ,  between 

,  of  the of ,  and  State  of ,  part 

of  the  first  part,  and  "  THE CO-OPERATIVE  SAVINGS  AND 

LOAN  ASSOCIATION  of  the of ,  in  the  county  of 

and  State  of  New  York,  a  corporation  duly  organized 

under  the  provisions  of  Chapter  556  of  the  laws  of  1887  of  the 
said  State  of  New  York,  party  of  the  second  part,  WITNESSETH  that 
the  said  part. .  of  the  first  part,  in  consideration  of  the  sum 

of dollars  duly  paid,  the  receipt  whereof  is  hereby  duly 

acknowledged,  ha . .  sold  and  by  these  presents  do . .  grant  and 
convey  to  the  said  party  of  the  second  part,  its  successors  and 

assigns,  all  that  tract  or  parcel  of  land  situate  in  the of 

county  of ,  and  State  of  New  York 


[Here  insert  description  of  mortgaged  premises.] 


This  grant  is  intended  as  a  security  for  the  payment  of  the 

sum  of dollars,  together  with  interest  thereon  at  the  rate 

of  six  per  cent  per  annum,  in  the  manner  and  at  the  times  pro- 
vided in  and  required  by  the  by-laws  of  the  said  party  of  the 
second  part  and  the  said  act  under  the  provisions  of  which  the 
said  party  of  the  second  part  is  incorporated,  special  reference 


APPENDIX.  277 

being  had  to  such  portions  of  said  act  and  the  said  by-laws  as  re- 
late particularly  to  loans  made  to  borrowers  and  the  payment  of 
such  loans  and  the  interest  thereon  and  the  payment  of  fines  in 
case  of  defaulted  payments  thereby  required,  and  the  said  provis- 
ions shall  be  deemed  a  part  of  this  instrument  as  fully  and  com- 
pletely as  though  set  forth  at  length  herein,  according  to  the 
conditions  of  a  bond  this  day  executed  and  delivered  by  the 

said  to  the  said  party  of  the  second   part ;  and  this 

conveyance  shall  be  void  if  such  payment  be  made  as  herein 
specified.  But  in  case  default  shall  be  made  in  the  payment  of 
the  principal  sum  hereby  intended  to  be  secured,  or  in  the  pay- 
ment of  the  interest  thereon,  or  of  any  part  of  said  principal  or 
interest  as  above  specified,  it  shall  be  lawful  for  the  party  of  the 
second  part,  its  successors  or  assigns,  at  any  time  thereafter,  to 
sell  the  premises  hereby  granted,  or  any  part  thereof,  in  the 
manner  prescribed  by  law,  and  retain  the  amount  then  due  for 
principal,  interest  and  fines,  together  with  the  costs  and  charges 
of  making  such  sale,  and  the  overplus,  if  any  there  be,  shall  be 
paid  by  the  party  making  such  sale,  on  demand,  to  the  said 
, heirs  or  assigns. 

AND   IT   IS   HEREBY   FURTHER   EXPRESSLY  AGREED  that  should 

any  default  be  made  in  the  payment  of  said  principal  sum  or 
the  interest  thereon,  or  any  part  of  said  principal  and  interest, 
as  hereinbefore  provided  to  be  paid,  and  the  same  remain  un- 
paid and  in  arrears  for  the  time  of  six  months,  or  should  any 
tax  or  assessment  levied  or  imposed  upon  the  premises  here- 
inbefore described,  become  due  and  payable  and  remain  unpaid 
by  the  part.,  of  the  first  part  for  the  time  of  six  months, 
then  and  from  thenceforth,  that  is  to  say,  after  the  lapse  of  the 
said  six  months,  in  either  of  the  aforesaid  events,  the  aforesaid 
principal  sum  or  any  and  all  sums  then  unpaid,  with  all  arrear- 
ages of  interest  and  fines  thereon,  shall,  at  the  option  of  the 
said  party  of  the  second  part,  its  successors  or  assigns,  become 
and  be  due  and  payable  immediately  thereafter,  although  the 
period  first  above  limited  for  the  payment  thereof  may  not  then 
have  expired,  anything  hereinbefore  contained  to  the  contrary 
thereof  in  any  wise  notwithstanding. 

AND   IT  IS  FURTHER  ALSO   HEREBY  EXPRESSLY  AGREED  by  and 

between  the  parties  to  this  instrument  that  the  said  part. .  of 


278   CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

the  first  part  shall  keep  the  buildings  erected  and  to  be  erected 
upon  the  lands  hereinbefore  described  insured  against  loss  and 
damage  by  fire  and  pay  the  premiums  therefor  and  assign  the 
policy  and  certificate  thereof  to  the  said  party  of  the  second 
part  as  a  collateral  security  hereto,  and  in  default  thereof  it 
shall  be  lawful  for  the  said  party  of  the  second  part  to  effect 
such  insurance,  and  the  premium  or  premiums  paid  for  secur- 
ing such  insurance  and  continuing  the  same,  shall  be  a  lien  on 
such  mortgaged  premises  added  to  the  amount  secured  by  these 
presents,  and  payable  on  demand  with  interest  at  the  rate  of 
six  per  cent  per  annum. 

IN   WITNESS  WHEREOF,  the  part.,    of   the  first   part  ha.. 

hereunto  set hand. .  and  seal. .  the  day  and  year  first 

above  written. 

Sealed  and  delivered 

in  the  presence  of         (L.  S.) 


State  of  New  York, 

'  -ss. 


County  of ) 

On  this day  of ,  in  the  year  of  our  Lord  one 

thousand  eight  hundred  and ,  before  me,  the  subscriber, 

personally  appeared 

to  me  known  to  be  the  same  person. .  described  in  and  who  exe- 
cuted the  within  instrument  and and  acknowledged  that 

.  .he. .  executed  the  same. 


No.  5. 

NEW  YORK.     BOND. 

Form  of  a  Bond  when  the  Association  is  incorporated  under  the 
Act  of  1887. 

KNOW  ALL    MEN  BY  THESE  PRESENTS    that  1, ,  of   the 

......  of ,  in  the  County  of ,  and  State  of  New 

York,  am  firmly  held  and  bound  unto  THE CO-OPERA- 
TIVE SAVINGS  AND  LOAN  ASSOCIATION  of  the of 

in  the  County  of and  State  of  New  York,  a  corporation 


APPENDIX.  279 

duly  organized  under  the  provisions  of  Chapter  556  of  the 

laws  of  1887  of  the  State  of  New  York,  in  the  sum  of  

dollars,  lawful  money  of  the  United  States  of  America,  to  be 

paid  to  the  said  THE  CO-OPERATIVE  SAVINGS  AND  LOAN 

ASSOCIATION,  its  successors  or  assigns.  For  which  payment, 
well  and  truly  to  be  made,  I  hereby  bind  myself,  my  heirs,  ex- 
ecutors, and  administrators,  jointly  and  severally,  firmly  by 

these  presents.    Sealed  with  my  seal  and  dated  this day 

of ,  one  thousand  eight  hundred  and 

THE   CONDITION  OF    THE   ABOVE    OBLIGATION   IS   SUCH,   that    if 

the  above  bounden  ,  his  heirs,  executors,  or  adminis- 
trators shall  well  and  truly  pay  or  cause  to  be  paid  unto  the 
above-named  THE CO-OPERATIVE  SAVINGS  AND  LOAN  ASSO- 
CIATION, its  successors  or  assigns,  the  sum  of dollars, 

together  with  interest  thereon  at  the  rate  of  six  per  cent  per 
annum,  in  the  manner  and  at  the  times  provided  in  and  re- 
quired by  the  by-laws  of  the  said  THE CO-OPERATIVE 

SAVINGS  AND  LOAN  ASSOCIATION  and  the  said  act  under  the  pro- 
visions of  which  the  same  is  incorporated,  special  reference 
being  had  to  such  portions  of  each  thereof  as  relate  particularly 
to  loans  made  to  borrowers  and  the  repayment  of  such  loans 
and  the  interest  thereon,  and  the  payment  of  fines  in  case  of 
defaulted  payments  thereby  required,  and  the  said  provisions 
shall  be  deemed  a  part  of  this  obligation  as  fully  and  com- 
pletely as  though  set  forth  at  length  herein,  without  fraud  or 
delay,  then  the  preceding  obligation  to  be  void,  otherwise  to 
remain  in  full  force  and  virtue. 

AND  IT  is  HEREBY  EXPRESSLY  AGREED  that  should  any  default 
be  made  in  the  payments  upon  said  principal  and  interest  or 
either  of  them  or  any  part  thereof,  as  hereinbefore  agreed  to  be 
made,  and  the  same  shall  remain  unpaid  and  in  arrears  for  the 
time  of  six  months,  (or  should  any  tax  or  assessment  levied  or 
imposed  upon  the  premises  described  in  the  mortgage  accom- 
panying this  bond,  become  due  and  payable,  and  remain  unpaid 
by  the  obligor  herein  for  the  time  of  six  months*),  then  and  from 

*  In  the  event  the  bond  is  secured  in  full  by  a  pledge  of  stock,  the 
clauses  relating  to  taxes,  assessments,  and  insurance  will  be  omitted. 
An  association,  in  the  preparation  of  its  blanks,  should,  as  a  matter  of 


280  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

thenceforth,  that  is  to  say,  after  the  lapse  of  said  six  months, 
the  aforesaid  principal  sum  or  any  and  all  sums  thereof  then 
remaining  unpaid,  with  all  arrearages  of  interest  and  fines  there- 
on, shall,  at  the  option  of  the  said  THE  CO-OPERATIVE  SAVINGS 
AND  LOAN  ASSOCIATION,  its  successors  or  assigns,  become  due 
and  payable  immediately  thereafter,  although  the  period  first 
above  specified  for  the  payment  thereof  may  not  have  expired, 
anything  hereinbefore  contained  to  the  contrary  notwithstanding. 

AND  IT  IS  FURTHER  HEREBY  EXPRESSLY  AGREED  by  and  be- 

tween  the  parties  to  these  presents  that  the  said  obligor  shall 
keep  the  buildings  erected  and  to  be  erected  upon  the  lands  de- 
scribed in  the  mortgage  accompanying  this  bond  insured  against 
loss  and  damage  by  fire,  in  an  amount  and  by  insurers  approved 
by  the  said  obligee,  its  successors  or  assigns,  and  pay  the  pre- 
miums therefor,  and  assign  the  policy  and  certificate  thereof 
to  the  said  obligee  as  a  collateral  security  hereto,  and  in  default 
thereof  it  shall  be  lawful  for  the  said  obligee  to  effect  such  in- 
surance, and  the  premium  or  premiums  paid  for  securing  such 
insurance  shall  be  added  to  the  principal  sum  hereby  secured  to 
be  paid,  and  shall  be  payable  on  demand  with  interest  at  the 
rate  of  six  per  cent  per  annum.* 
Sealed  and  delivered 
in  the  presence  of  (L.  S.) 

State  of  New  York,  )  sg 

County  of ) 

On  this day  of ,  in  the  year  of  our  Lord  one 

thousand  eight  hundred  and ,  before  me,  the  subscriber, 

personally  appeared ,  to  me  known  to  be  the  same  person 

described  in  and  who  executed  the  foregoing  instrument,  and 
duly  acknowledged  that  .  .he. .  executed  the  same. 


convenience,  have  them  printed  in  "both  ways,  one  for  a  "  stock  loan  " 
and  one  for  a  "  mortgage  loan." 
*  Ibid. 


APPENDIX.  281 

No.  6. 

NEW  YORK.     MORTGAGE. 

Form  of  Mortgage  to  be  taken  by  an  Association  incorporated 
under  the  Act  of  1851. 

This  INDENTURE  made  this day  of ,  in  the  year 

of  our  Lord  one  thousand  eight  hundred  and ,  between 

of  the of ,  county  of ,  and  State  of 

,  part  . .  of  the-  first  part,  and  the association  of 

the of ,  in  the  county  of ,  and  State  of  New 

York,  party  of  the  second  part,  WITNESSETH  that  the  said  par- 

t . .  of  the  first  part,  in  consideration  of  the  sum  of 

dollars  duly  paid,  the  receipt  whereof  is  hereby  acknowledged, 
ha. .  sold  and  by  these  presents  do. .  grant  and  convey  to  the 
said  party  of  the  second  part,  its  successors  or  assigns,  all  that 

tract  or  parcel  of  land  situate  in  the of ,  county 

of ,  and  State  of  New  York, 


[Here  insert  description  of  mortgaged  premises.] 


This  grant  is  intended  as  a  security  for  the  payment  of  the 

sum  of dollars,  with  interest  thereon  at  the  rate  of  six 

per  cent  per  annum,  in  the  manner  and  at  the  times  provided 
in  and  required  by  the  articles  of  association  and  by-laws  of 
the  party  of  the  second  part  hereto,  special  reference  being  had 
to  such  portions  of  each  thereof  as  relate  particularly  to  loans 
made  to  borrowers,  and  the  payment  of  such  loans  and  interest 
thereon,  and  fines  upon  defaulted  payments,  to  which  said 
articles  of  association  and  by-laws  reference  is  hereby  made  for 
the  times  and  the  manner  of  the  payment  of  said  sum,  with  in- 
terest thereon,  and  the  same  are  hereby  deemed  to  be  a  part  of 
this  instrument  as  fully  and  completely  as  though  fully  set  forth 
at  length  herein,  according  to  the  condition  of  a  bond  this  day 

executed  and  delivered  by  the  said to  the  said  party  of 

the  second  part ;  and  this  conveyance  shall  be  void  if  payments 
be  made  as  herein  specified. 

But  in  case  default  be  made  in  the  payment  of  the  principal 
19 


282  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

sum  hereby  intended  to  be  sccaired  or  in  the  payment  of  the 
interest  thereon,  or  in  any  part  of  such  principal  or  interest  or 
fines  upon  defaulted  payments  as  above  provided,  it  shall  be 
lawful  for  the  party  of  the  second  part,  its  successors  or  assigns, 
at  any  time  thereafter,  to  sell  the  said  premises  hereby  granted, 
or  any  part  thereof,  in  the  manner  prescribed  by  law,  and  out  of 
the  moneys  arising  from  said  sale  to  retain  the  amount  then 
due  for  principal,  interest,  and  fines,  together  with  the  costs 
and  charges  for  making  such  sale,  and  the  overplus,  if  any 
there  be,  shall  be  paid  by  the  party  making  such  sale,  on  de- 
mand, to  the  said , heirs,  executors,  and  assigns. 

AND   IT  IS   FURTHER   HEREBY   EXPRESSLY  AGREED  that  should 

any  default  be  made  in  the  payment  of  said  principal  and  in- 
terest, or  of  any  part  thereof,  at  any  time  when  the  same  is  made 
payable  as  hereinbefore  provided,  and  the  same  shall  remain 
unpaid  and  in  arrears  for  the  time  of  six  months,  or  should  any 
tax  or  assessment  levied  or  imposed  upon  the  premises  herein- 
before described  become  due  and  payable  and  remain  unpaid 
by  the  part. .  of  the  first  part  for  the  time  of  six  months,  then 
and  from  thenceforth,  that  is  to  say,  after  the  lapse  of  the  said 
six  months,  the  aforesaid  principal  sum  or  any  and  all  sums 
then  unpaid,  with  all  arrearages  of  interest  and  fines  thereon, 
shall,  at  the  option  of  the  said  party  of  the  second  part,  its  suc- 
cessors or  assigns,  become  and  be  due  and  payable  immediately 
thereafter,  although  the  period  hereinbefore  provided  for  the 
payment  thereof  may  not  then  have  expired,  anything  herein- 
before contained  to  the  contrary  thereof  in  any  wise  notwith- 
standing. 

[Here  insert  the  clause  relating  to  insurance  as  found  in  the 
preceding  form  of  mortgage  under  the  act  of  1887.  Also  the 
attestation  clause  and  acknowledgment  as  there  found.] 


No.  7. 

NEW  YORK.     BOND. 

Form  of  Bond  to  be  taken  by  an  Association  incorporated  under 
the  Act  of  1851. 

KNOW    ALL    MEN    BY    THESE     PRESENTS     that     I,     ,    of 

the  of  ,  in  the  county  of  ,  and  State 


APPENDIX.  283 

of  New  York,  am  held  and  firmly  bound  unto  THE  

ASSOCIATION   OF   THE    of    ,  in    the   county   of 

,  and    State    of    New    York,    in    the    sum    of    

dollars,  lawful  money  of  the  United  States,  to  be  paid  to  the 

said   association,  or  to  its  successors  or  assigns,  for 

which  payment  well  and  truly  to  be  made bind 

and heirs,  executors  or  administrators,  jointly  and  sever- 
ally, firmly  by  these  presents. 

Sealed  this day  of  ......  in  the  year  of  our  Lord  one 

thousand  eight  hundred  and 

THE   CONDITION   OF   THIS    OBLIGATION    IS    SUCH    THAT,    if    the 

above  bounden , heirs,  executors,  or  administrators, 

shall  and  do  well  and  truly  pay  or  cause  to  be  paid  unto  the 

above-named association,  its  successors  or  assigns,  the 

sum  of dollars,  with  interest  thereon  at  the  rate  of  six  per 

cent,  per  annum,  in  the  manner  and  at  the  times  provided  in 
and  required  by  the  articles  of  association  and  by-laws  of  the 
obligee  herein,  special  reference  being  had  to  such  portions  of 
each  thereof  as  relate  particularly  to  loans  made  to  borrowers 
and  the  payment  of  such  loans,  principal,  interest,  and  fines 
upon  defaulted  payments,  and  to  which  said  articles  of  associa- 
tion and  by-laws  reference  is  hereby  made  for  the  times  and 
conditions  of  the  payment  of  said  sum,  with  interest  thereon, 
and  fines  in  case  of  defaulted  payments,  and  which  portions  of 
said  articles  of  association  and  by-laws  shall  be  deemed  a  part 
of  this  obligation  as  fully  and  completely  as  though  stated  at 
length  herein,  without  fraud  or  delay,  then  the  preceding  ob- 
ligation to  be  void;  otherwise  to  remain  in  full  force  and 
virtue. 

AND  IT  IS  FURTHER  HEREBY  EXPRESSLY  AGREED,  that  should 

any  default  be  made  in  the  payment  of  the  said  principal  or 
interest  or  any  part  thereof  as  the  same  are  hereinbefore  pro- 
vided to  be  paid,  and  the  same  shall  remain  unpaid  and  in 
arrears  for  the  time  of  six  months  (or  should  any  tax  or  assess- 
ment be  levied  or  imposed  upon  the  premises  described  in  the 
mortgage  accompanying  this  bond,  become  due  and  payable, 
and  remain  unpaid  by  the  obligor  herein  for  the  time  of  six 
months),  then  and  from  thenceforth,  that  is  to  say,  after  the 
lapse  of  the  said  six  months  in  either  of  the  preceding  events, 


284:  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

the  aforesaid  principal  sum,  or  any  and  all  sums  then  unpaid, 
with  arrearages  of  interest  and  fines  thereon,  shall,  at  the  option 

of  the  said association,  its  successors  or  assigns,  become 

and  be  due  and  payable  immediately  thereafter,  although  the 
period  first  above  provided  for  the  payment  thereof  may  not 
then  have  expired,  anything  hereinbefore  contained  to  the  con- 
trary notwithstanding.* 


No.  8. 

TREASURER'S  BOND. 

KNOW  ALL  MEN  BY   THESE   PRESENTS   that   WC, 


are  held  and  firmly  bound  unto  The  Co-operative 

Savings  and  Loan  Association  of  ,  in  the  county  of 

,  and  State  of  ,  in  the  sum  of thousand 

dollars,  lawful  money  of  the  United  States,  to  be  paid  to  the 

said  Co-operative  Savings  and  Loan  Association,  its 

successor  or  assigns,  for  which  payment  well  and  truly  to  be 
made,  we  do  hereby  bind  ourselves,  our  heirs,  executors,  and 
administrators  jointly  and  severally,  firmly  by  these  presents. 

Sealed  with  our  seals  and  dated  the  day  of , 

18... 

Whereas  the  above  bounden has  been  duly  elected 

Treasurer  of  The Co-operative  Savings  and  Loan  Asso- 
ciation, 

Now,  THEREFORE,  the  condition  of  the  above  obligation  is 
such,  that  if  the  said shall  well,  faithfully,  and  hon- 
estly in  all  things  perform  the  duties  of  said  office  during  his 
continuance  in  office,  and  shall,  at  the  expiration  of  his  said 

*  In  the  event  the  bond  is  accompanied  by  a  mortgage,  add  the 
clause  found  in  the  preceding  form  of  "bond  under  the  act  of  1887,  in 
reference  to  insurance ;  and  in  the  event  the  bond  is  not  accompanied 
by  a  mortgage,  omit  from  the  foregoing  form  the  clause  relating  to  taxes 
and  assessments.  The  suggestions  in  the  notq  to  the  preceding  form 
for  the  bond  under  the  act  of  1887  are  also  applicable  to  the  preparation 
of  blanks  under  the  act  of  1851.  For  acknowledgment  to  this  bond, 
see  preceding  forms. 


APPENDIX.  285 

office,  or  whenever  and  as  often  as  required,  make  and  render 

unto  said Co-operative  Savings  and  Loan  Association,  or 

the  Board  of  Directors  thereof,  a  just  and  true  account  of  all 
moneys,  securities,  property,  and  other  things  which  shall  come 
into  his  possession,  custody,  control,  or  charge  as  such  officer, 
and  shall  pay  and  deliver  over  to  his  successor  in  office,  or  any 
other  person  duly  authorized  to  receive  the  same,  all  sums  of 
money,  securities,  property,  and  other  things  belonging  to  said 

Co-operative  Savings  and  Loan  Association,  and  in 

his  possession,  control,  or  charge  as  Treasurer,  then  this  obliga- 
tion to  be  void,  otherwise  to  remain  in  full  force  and  effect. 

(L.S.) 

(L.S.) 


[The  acknowledgment  same  as  in  form  No.  5.] 

No.  9. 

ASSIGNMENT  OF  STOCK  TO  SECURE  A  LOAN. 

KNOW  ALL   MEN  BY  THESE   PRESENTS   that   I, ,  of  the 

of ,  in  the  county  of ,  and  State  of ,  in 

consideration  of  a  loan  made  to  me  by  The Co-operative 

Savings  and  Loan  Association  of  $ ,  have  agreed  to  assign 

and  transfer  and  do  hereby  assign  and  transfer  unto  the  said 
association,  its  successors  and  assigns,  all  my  right,  title,  and 

interest  in  and  to shares  of  series  No ,  also 

shares  of  series  No ,  of  the  capital  stock  of  the  said  asso- 
ciation now  belonging  to  me  and  standing  in  my  name,  as  a 
security,  collateral  to  my  bond  this  day  given  to  said  association 
for  the  payment  of  said  loan  and  interest  thereon  at  the  time 
and  times  and  in  the  manner  therein  mentioned.  And  I  hereby 
authorize  said  association,  in  case  I  should  make  default  in  the 
payment  of  said  loan  and  interest  thereon  or  any  part  thereof 
as  required  by  said  bond,  and  shall  so  remain  in  default  for  six 
months,  to  cancel  said  shares  of  stock  above  described  and  apply 
the  withdrawal  value  thereof  at  such  time  upon  my  said  loan, 
and  in  the  event  any  surplus  remains  after  the  full  payment  of 
said  loan  and  interest  thereon  and  fines,  the  same  shall  be  paid 


286  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

to  me,  my  executors,  administrators,  or  assigns,  and  I  hereby 
covenant  and  agree  with  said  association  to  continue  to  pay  dues 
upon  said  shares  of  stock  until  said  loan  shall  be  wholly  paid. 

In  witness  whereof  I  have  hereunto  set  my  hand  this 

day  of ,18... 


[Acknowledgment  same  as  in  form  No.  5.] 


No.  10. 

NOTICE  OF  REPAYMENT  OF  LOAN  AND  WITH- 
DRAWAL OF  STOCK. 

To  the  Board  of  Directors  of  the Co-operative  Savings 

and  Loan  Association. 

GENTLEMEN:  Please  take  notice  that  I  have  repaid  my  loan 

of shares,  less  the  withdrawal  value  of  the  following 

shares  of  stock  which  the  association  holds  as  security  for  the 

payment  of  said  loan,  viz., shares  in  series  No 

and shares  in  series  No 

I  further  also  hereby  give  notice  of  my  desire  to  withdraw 
said  shares  of  stock  and  have  the  withdrawal  value  thereof  ap- 
plied upon  said  loan,  thereby  completing  the  payment  of  the 
same;  and  for  such  purpose  I  hereby  authorize  you  to  direct 
that  the  order  issued  to  pay  such  withdrawal  value  be  made  pay- 
able to  the  Treasurer  of  said  association. 

I  request  that  you  duly  authorize  the  proper  officers  to  ex- 
ecute a  discharge  of  my  mortgage  to  the  association. 


No.  11. 

WITHDRAWAL  NOTICE. 

To  the  Board  of  Directors  of  the Co-operative  Savings 

and  Loan  Association. 

GENTLEMEN  :  I  hereby  give  notice  of  my  desire  to  withdraw 
the  following  shares  of  stock  owned  by  me  and  standing  in  my 

name  on  the  books  of  your  association,  viz., shares,  series 

; shares,  series 


APPENDIX.  287 

I  hereby  direct  that  the  order  issued  for  such  withdrawal 
value  be  made  payable  to  the  order  of  myself. 
Dated, 18... 


No.  12. 

STOCK  PROXY. 

KNOW    ALL     MEN     BY    THESE     PRESENTS    that    I, ,  a 

stockholder  in  The Co-operative  Savings  and  Loan  Asso- 
ciation, have  appointed  and  do  hereby  appoint  ,  my 

true  and  lawful  attorney,  with  power  of  substitution  and  revo- 
cation for  me  and  in  my  name  to  vote,  as  fully  as  1  might  do  if 
personally  present,  at  the  annual  (or  special)  meeting  of  the 

stockholders  of  said  association,  to  be  held  on  the day  of 

,18... 

Witness  my  hand  this day  of  .......  18. .. 


State  of i 

County  of  . .  \  ss' 

On  this day  of ,18. .,  before  me,  the  subscriber, 

personally  appeared ,  to  me  known  to  be  the  same  per- 
son named  in  and  who  signed  the  foregoing  proxy,  and  duly  ac- 
knowledged that  . .  he . .  executed  the  same. 


No.  13. 

DESCRIPTION   OF  SECURITIES    OFFERED   BY   BOR- 
ROWER AND  REPORT  OF  FINANCE  COM- 
MITTEE THEREON. 

To  the  Board  of  Directors  of  the Co-operative  Savings 

and  Loan  Association : 
GENTLEMEN  :  For  the  purpose  of  securing  the  repayment  of 

the  loan  of shares,  amounting  to  $ ,  which  you 

have  awarded  to  me,  in  addition  to  the  usual  bond  required  and 
as  collateral  thereto,  I  offer  you  the  securities  following :  1st., 
shares  of  series  No of  your  association,  now 


288  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS- 

standing  in  my  name  and  upon  which  such  loan  is  made 

shares  of  series  No , shares  of  series  No ; 

2d.,  a  first  mortgage  on  real  estate  known  as  No on 

Street.    The  lot  is feet  front  and  rear,  and 

deep.     There  is  situate  on  said  lot  a dwelling-house 

facing Street,  having stories.     The  first  story 

contains rooms finished ;  the  second  story  con- 
tains . .      , .  rooms  . .       .  finished. . . 


There  is  also  on  the  lot 


The  buildings  are  in repair  and  insured  as  follows  : 

Dwelling-house  at  $ ;  barn  at  $ 

The  premises  are  assessed  for  taxation  at  $ 

Dated ,18 


The  undersigned  Finance  Committee  hereby  report  that  they 
have  personally  examined  the  real  estate  described  in  the  fore- 
going application  and  find  such  description  substantially  cor- 
rect, except 


We  appraise  the  value  thereof  at  $ and  approve  of  the 

same  for  a  loan  of  $ ,  provided  the  mortgage  is  accom- 
panied by  an  abstract  of  title  approved  by  the  attorney  of  the 
association  and  contains  suitable  provisions  for  insurance  upon 
the  buildings  against  loss  by  fire  or  lightning  for  the  benefit  of 
the  association. 

Dated.,  .,188.. 


v  Finance  Com. 


APPENDIX.  289 

No.  14. 

CERTIFICATE  OF  STOCK. 

Series  No Issue  of  18. .. 

THE CO-OPEEATIVE 

SAVINGS    AND    LOAN    ASSOCIATION, 

,N.Y. 

shares.  No 

This  is  to  certify  that   is  entitled  to shares, 

series  No of  the  capital  stock  of  The Co-opera- 
tive Savings  and  Loan  Association,  transferable  only  on  the 
books  of  the  said  association  in  person  or  by  attorney,  in  the 
presence  of  the  President  or  Secretary,  upon  surrender  of  this 
certificate. 

Given  under  the  seal  of  the  association  at , 


(US->  N.Y,.  ..is.. 


.,  President. 
.,  Secretary. 


No.  15. 

FORM  OF  ASSIGNMENT  OF  SHARES  OF  STOCK. 

(to  be  printed  on  the  back  of  the  certificate). 
For  value  received  I  do  hereby  sell,  assign,  transfer,  and  set 

over  unto all    my  right,  title,  and  interest  in  and  to 

shares,  series  No of  the  capital  stock  of  The 

Savings  and  Loan  Association,  and  I  do  hereby  consti- 
tute and  appoint my  true  and  lawful  attorney,  irrev- 
ocable, for  me  and  in  my  name  and  behalf  to  assign  and  trans- 
fer to the  said  shares  of  capital  stock  hereby  sold  and 

for  that  purpose  to  do  all  acts  and  execute  all  papers  necessary 
to  perfect  such  sale  and  transfer  upon  the  books  of  said  associa- 
tion. 

Witness  my  hand  and  seal  this day  of  ,  18. . . 

(L.S.) 

[Acknowledgment  clause  same  as  in  form  No.  5.] 


290  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

No.  16. 

SHAREHOLDER'S  PASS-BOOK. 


18... 


Dollars. 


Cents. 


March 
April.. 
May... 
June . . 


July 

August 

September 

October.. . 


November . . 


December , 


January , 


February 


The  above  is  a  convenient  form  for  the  pass-book.  The 
front  cover  has  written  upon  it  the  name  of  the  shareholder. 
One  page,  as  above  given,  covers  a  year  of  time,  in  an  associa- 
tion, of  monthly  dues.  The  officer  receipting  for  the  money 
fills  in  the  amount  paid  opposite  the  month  and  signs  his  name 
to  the  right.  The  book  can  be  made  up  to  cover  any  length  of 
time  desired.  Between  each  leaf  should  be  bound  in  a  thin 
blotting-paper,  so  that  the  receipting  officer  can  close  the  book 
at  once  on  making  the  entries,  as  a  matter  of  saving  time. 


APPENDIX. 


291 


No.  17. 


ANNUAL  REPORT. 


The annual  Report  of  the Co-operative  Savings 

and  Loan  Association  from ,  18. .,  to ,  18. . 


RECEIPTS. 

Cash  at  last  report. . . 

Dues 

Interest.. 

Fines 

Entrance  fees 

Transfer  fees 

Premiums 

Loans  repaid 

Dues  paid  in  advance. 
Borrowed  money 

Total. 

PEOFITS. 

Undivided   profits  at 
last  report.. 

Interest 

Premiums 

Fines 

Entrance  fees 

Transfer  fees 

Profits  on  withdrawals 


Total. 


DISBURSEMENTS. 

Mortgage  loans. 

Stock  loans 

Stock  withdrawn 

Matured  stock 

Salary  of  secretary . . . 
Salary  of  treasurer. . . 

Rent 

Account-books 

Printing 

Paid  borrowed  money. 
Balance  cash.. 

Total. 

LOSS. 

Salaries 

Rent 

Account-books 

Printing 

Incidental  expenses . . 

Amount  dividends  de- 
clared  

Balance  undivided 
profits. 

Total. 


ASSETS. 

Loans  secured  by  first  mortgage  on  real  estate. 
Loans  secured  by  pledge  of  stock  of  the  association. . . 

Dues,  interest,  and  fines  in  arrears 

Cash  in  the  treasury 

Other  personal  property 

Total. . 


292  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 

LIABILITIES. 

Capital  stock,  ....  series,  ____  shares  at 


Dues  and  interest  paid  in  advance 
Undivided  profits 
Borrowed  money 


Total 

STATISTICS. 

Total  number  of  shares  outstanding 

Total  number  of  shareholders 

Greatest  number  of  shares  held  by  one  shareholder. 
Total  number  of  shares  borrowed  upon 

Total  number  of  borrowers 

Largest  loan 


NUMBER   OF   SHARES   BORROWED   UPON   IN   EACH    SERIES. 


series series series series. 

shares  . .         . .  shares  . .         . .  shares  . .         . .  shares. 


AMOUNT    DUES    PAID,    AMOUNT   OF    PROFITS,   HOLDING    VALUE,   AND 
WITHDRAWAL  VALUE   OF   ONE   SHARE   IN   EACH    SERIES. 

Amount  dues  paid series series series 

Amount  of  profits    

Holding  value          

Withdrawal  value    

Dated ,18.. 

,  Secretary. 

The  undersigned,  auditing  committee  of  the  stockholders, 
hereby  report  that  they  have  carefully  examined  the  books  of 
the  Secretary,  and  verified  the  entries  therein,  and  find  the  fore- 
going report  correct  in  all  respects. 
Dated ,18.. 


C  Auditing  Committee. 


APPENDIX. 


293 


No.  18. 


SECRETARY'S  MONTHLY  REPORT. 


YEAR. 

Total 
shares 
out- 
stand- 
ing. 

Dues 
paid. 

Total 
shares 
bor- 
rowed 
upon. 

Inter- 
est 
paid. 

Fines 
paid. 

En- 
trance 
fees 
paid. 

Trans- 
fer 
fees 
paid. 

Pre- 
miums 
paid. 

Total  re- 
ceipts ex- 
clusive of 
loans  re- 
paid. 

Jan... 

Feb... 

March 

April.. 

Stock  v  ithdrawn. 

Loans  repaid. 

Ex- 
penses 
paid. 

Remarks. 

Series 
No. 

No. 
of 
shares. 

Amount 
paid. 

Profits 
retained 
by  asso- 
ciation. 

Series 
No. 

No. 
of 
shares. 

Amount 

NOTE. — The  lower  part  of  the  above  form  belongs  on  the 
right  of  the  upper  part.  In  preparing  a  blank  for  use  it  should 
be  so  placed,  and  the  rulings  across  the  page  extended  to  in- 
clude a  year.  If  the  association  has  become  the  owner  of  real 
estate,  and  receives  rents,  a  proper  heading  and  ruling  should 
be  inserted  to  enter  them. 


GENERAL  INDEX. 


Accounts,  complexity  of,  in  gross 
plan,  86, 102. 

how  to  keep  them,  179-208. 

importance  of  accurate,  179. 
Account-books,  names  of  those  ne- 
cessary, 181. 

See  FORMS. 

Administrator,  rights  of,  164. 
Appraisers,  153,  288. 

suggestions  for,  128. 
Articles  of  association,  139-178,  263. 

amendment  of,  173. 

filing,  176,  177. 

how  executed,  174. 

preamble  to,  142. 
Associations,  wrongly  classified  as 

building  and  loan,  94,  95. 
Attorney,  his  duties,  127,  152. 

how  appointed,  147. 
Auditing  committee,  154. 

Balance-sheet,  form  of,  197. 
Blank  forms.    See  FORMS. 
Bonds  of  officers,  124,  150. 
Bonus,  77. 
Books  of  account,  181. 

how  to  keep  them,  179-208. 

See  FORMS. 
Borrower,  advantages  to,  105,  106. 

how  premium  affects,  27,  78,  106. 

manner  of  borrowing,  23,  158. 

manner  of  paying  his  loan,  1G2. 


Borrower,  security  required  from, 

25,  161. 
to  what  amount  he  may  borrow, 

22,  157. 
who  may  become  a  borrower,  23, 

78,  157. 

Borrowing  money,  215. 
Building  associations,  8,  42. 

the  first,  42. 
Building  and  loan  associations,  7, 

41-69,  70-95. 
which  of  the  several  schemes  the 

best.  97-112. 
By-laws,  21,  130,  173. 
adoption  of,  136,  216. 
framing  of,  121. 
precedents  for,  247,  254. 

Capital,  accumulated   savings,  17, 

143. 

constantly  changing,  17. 
represented  by  shares  of  stock,  16. 
Capital   stock,   how   increased   or 

diminished,  225. 
Certificate  of  incorporation.     See 

FORMS. 

how  made  evidence,  226. 
Certificate  of  stock,  137, 145. 
form    of    assignment    of.      See 

FORMS. 

how  assigned,  145. 
Committee,  finance,  153. 


296  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 


Committee,  auditing,  154. 
Connecticut,  building  and  loan  as- 
sociations of,  52. 
Co-operation,  a  brief  discussion  of, 

1-8.    . 

Co-operative   banks.     See   MASSA- 
CHUSETTS. 

Co-operative  savings  and  loan  as- 
'  sociations,  16. 

a  generic  name  to  include  all  as- 
sociations of  this  class,  8. 
benefits  resulting  from,  9-15. 
how  to  organize  under  New  York 

act  of  1887, 113-136. 
how  to  organize  under  New  York 

act  of  1851, 138-178. 
review  of  the  development  of  the 
schemes  upon  which  they  are 
conducted,  70-95. 
serial  plan,  72. 
their  growth  and  spread  in  the 

United  States,  41-^9. 
their  safety  discussed,  38-40. 
terminating  plan,  71-72. 
the  typical  association  described, 

16-40. 

which  scheme  is  the  best?  97- 
112. 

Directors,   board  of,   who  consti- 
tutes, 38. 

how  elected,  39,  123. 
their  duties,  38,  39. 
their  meetings,  130, 155. 
Distribution  of  profits,   closing  of 

books  to  make,  191-197. 
how  made,  27-34,  166,  191-199. 
when  made,  18,  166. 
Dividends,  borrower  does  not  get 
back  his  premium  in  dividends 
upon  his  stock,  78,  108. 
how  declared,  27-34,  191, 199. 
Division  of  labor,  benefits  resulting 

from,  4-6. 

discontent  produced  by,  5. 
indirect  co-operation,  4. 
Dues  cease  when  stock  matures,  17, 
145. 


Dues,  fines  in  case  payment  of,  de- 
faulted, 22,  135,  164. 
prompt  payment  of,  desirable,  22, 

135. 

what  are  dues,  17, 145. 
when  paid,  21,  76,  98,  130,  145. 
who  receives,  21,  77,  98. 

Entrance  fee,  defined,  21. 
proper  sum  for,  135  -145. 
Equality  of  benefits,  103. 
Exemptions,  217,  226. 

Finance  committee,  duties   of,  in 

passing  upon  securities,  127-130, 

153. 

how  appointed,  127,  153. 
how  long  to  serve,  127, 153. 
receipt  of  dues  by,  2,  21,  127,  153. 
Fines,  amount  of,  22, 135,  164,  235. 

why  imposed,  22,  135,  164. 
Forced  withdrawals,  37,  76. 
Forms,  agreement  to  unite  in  for- 
mation of  association,  114. 
affidavit  to  articles  of  association, 

177. 

annual  report,  291. 
assignment  of  stock,  289. 
assignment  of  stock  to  secure  a 

loan,  285. 
bond    accompanying   mortgage, 

278,282. 
books  of  account,  main  set  of, 

cash-received  book,  185. 

dues,  interest,  and  fines  book, 
182. 

journal  day-book,  188. 

ledger,  194. 
books  of  account,  auxiliary  set  of, 

insurance-expiration  book,  204. 

secretary's    security    register, 
206. 

stock  journal  day-book,  200. 

stock  ledger.  Part  I,  201. 

stock  ledger,  Part  II,  202. 

stock  trial-balance  book,  244. 

treasurer's    security    register, 
266. 


GENERAL  INDEX. 


297 


Forms,  by-laws,  under  Massachu- 
setts law,  251-203. 

by-laws,  uuder  New  York  act  of 
1887,  247-253. 

certificate  attached  to  articles  of 
association,  176. 

certificate  by  incorporators,  119. 

certificate  by  Secretary  of  State, 
119. 

certificate  of  stock,  289. 

mortgage,  New  York,  276,  281. 

notice  repayment  of  loan,  286. 

report  of  insurance  committee, 
288. 

secretary's  monthly  report,  293. 

shareholder's  passbook,  290. 

stock  proxy,  287. 

treasurer's  bond,  284. 

withdrawal  notice,  286. 

Gross  plan  of  premiums  explained, 
80-87. 

Habits  of  saving,  cultivation  of,  9. 
Holding  value,  definition  of,  19. 
Home,  sweet  home,  11. 
how  to  get  one,  13,  14. 

Elinois,  building  and  loan  associa- 
tions of,  58-60. 

Incorporation,  procedure  in,  115- 
120,  138-178. 

Installment  plan  of  premiums  ex- 
plained, 88-91. 

Interest,  effect  of  premium  upon, 

27, 105-111. 
how  paid,  25, 158. 
rate  of,  25,  91, 158. 

Interest  premium  plan  explained, 
88-91. 

Iowa,  building  and  loan  associa- 
tions of,  64. 

Loans,  forced  collection  of,  27,  163. 
how  paid,  26,  162. 
how  right  to  a  loan  is  determined, 

23,  59. 
limit  of.  22,  157. 


Loans,  mortgage  loan  defined,  25. 

safety  of  loans,  25,  97. 

security  required  for,  25,  161. 

stock  loan  defined,  25. 

to  whom  made,  22,  157. 

when  made,  24,  158. 

who  passes  upon  sufficiency  of, 

24,  153. 
Loss,  liabilities  of,  discussed,  34-37. 

Maine,  building  associations  of,  51. 

Married  women  as  stockholders,  144. 

Maryland,  building  and  loan  asso- 
ciations of,  65,  G6. 

Massachusetts,  co-operative  banks 

of,  49-51,  107. 
law  of,  236. 

Matured  share,  17,  75,  144. 

Meetings,  directors1,  130,  155. 
stockholders1,  130, 154, 156. 

Michigan,  building  and  loan  asso- 
ciations of,  62. 

Minnesota,  building  and  loan  asso- 
ciations of,  62,  63. 

Minors,  how  stock  is  held  for,  144. 

Missouri,  building  and  loan  associa- 
tions of,  64. 

Moneys  i-eceived,  how  apportioned, 
20,  171. 

Mortgages,  foreclosure  of,  27. 
forms  for.    See  FORMS. 
payment  of,  25,  26. 

Mutual  Home  and  Savings  Associa- 
tion, Dayton,  Ohio,  57,  75. 

Name,  choice  of,  118. 

Net  plan  of  premiums  explained, 

87,88. 
New  Hampshire,  building  and  loan 

associations  of,  51. 
New  Jersey,  building  and  loan  as- 
sociations of.  45-49. 
New  York,  building  and  loan  asso- 
ciations of,  53. 
laws  of,  act  of  1887,  209. 
laws  of,  act  of  iar>l,  219. 
State  league  of,  56. 
New  York  premium  plan  explained, 
93,  93. 


298  CO-OPERATIVE  SAVINGS  AND  LOAN  ASSOCIATIONS. 


Officers,  compensation  of,  122, 172. 
duties  of,  124-130, 148-154. 
election  of,  147,  175. 
names  of,  122,  147. 
suspension  and  removal  of,  148. 
terms  of,  122,  147. 
vacancies  in,  how  filled,  147. 
Ohio,  building  and  loan  associations 

of,  56-58. 
laws  of,  244. 
Orders,  how  drawn  on  treasurer, 

124,  149. 
Organization,    first    step    in,    113, 

140. 

Oxford   Provident  Building  Asso- 
ciation, 42. 

Pacific  coast,  building  and  loan  as- 
sociations of  the,  67. 
Pass-books,  directions  how  to  make, 
290. 

form  of,  290. 

who  receipts  for  money  in  pass- 
book, 21,  39. 

Pennsylvania,  brief  history  of  asso- 
ciations in,  42-45. 

first  association  at  Philadelphia, 
42. 

laws  of,  229-236. 
Premium,  a  bonus,  77. 

gross  plan  of,  79,  80-87,  159. 

high  premiums  work  injustice  be- 
tween borrower  and  non-bor- 
rower, 106-108. 

installment  plan  of,  79,  88-91,  159. 

interest  premium  plan,  79,  159. 

manner  of  bidding,  23. 

net  plan  of,  79. 

New  York  premium  plan,  23,  79, 
101. 

no  premium  necessary  except  for 
one  purpose,  79. 

41  unearned  "  and  "  earned  "  pre- 
miums, 85. 

what  is  a,  77,  210. 

which  scheme  of  premiums  the 

best,  110. 
President,  duties  of,  124, 126, 148. 


Profits,  "apparent  profits"  and 
"  actual  profits,"  85. 

carried  over  undivided,  34. 

distribution  of,  how  made,  27-34, 
166,  191-199. 

dividend  from,  34. 

from  what  sources  derived,  27, 104. 

guarantee  fund,  to  secure  uni- 
form dividends  from,  34. 

large  profits  indicate  that  free 
shareholders  are  fleecing  the 
borrowing  shareholder,  78. 

when  to  be  distributed,  18,  34, 166. 
Proxy,  form  of,  to  vote  at  meetings, 
287. 

Real  estate,  when  it  may  be  pur- 
chased, 27, 164. 
Rebates  in  gross  plan,  explained, 

82-87,  234. 

Reports,  annual,  to  bank  depart- 
ment, 217,  226. 
by  secretary,  125,  151. 
by  finance  committee.  See  FORMS. 
form  of  annual.    See  FORMS. 
penalty  for  failing  to  make,  218, 

229. 

Rhode  Island,  building  and  loan  as- 
sociations of,  51. 

Savings,  cultivating   the  habit  of 

saving,  9. 

means  to  encourage  the  accumu- 
lation of,  9. 

Secretary,  duties  of,  125-127,  150. 
election  of,  147. 
reports  by,  125,  151. 
Security  register,  206,  207. 
Serial  plan,  advantages  of,  72,  73. 
Series,  stock  issued  in,  18,  135. 
Simplicity    of    scheme    desirable, 

100-103. 
Southern  States,  building  and  loan 

associations  of  the,  66,  67. 
Stock,  each  share  of  the  same  value 

in  the  same  series,  1 8. 
holding  value  of,  19,  199. 
how  issued  and  paid  for,  17,  70,  71. 


GENERAL  INDEX. 


299 


Stock,  limit  of  shares  to  a  single 

stockholder,  21,  1-iG. 
pledged  or  borrowed  share,  21, 

146. 

transfer  of  stock,  145. 
See  FORMS. 

unpledged  or  free  shares,  21, 146. 
withdrawal  of,  19,  30,  181. 
withdrawing  value  of,  19,  131. 
Stockholder,  his  right  to  become  a 

borrower,  22. 
how  to  become  a,  17,  144. 
limit  to  shares  he  can  hold,  21, 

146. 

who  may  become  a,  144. 
Stock  loan,  defined,  25. 

Terminating  plan,  72,  74. 

The  Chemung  Valley  Mutual  Loan 
Association,  107,  180. 

The  Homestead  Loan  Association, 
54,  75. 

The  People's  Building  and  Loan  As- 
sociation, 263. 

Transfer  fee,  21. 


Treasurer,  bond  of,  124, 149. 
duties  of,  121,  149. 
election  of,  147. 
receipts  given  by,  21,  22, 149. 

Undivided  profits,  34, 198. 
"Unearned  premium,"  explained, 

85. 

Vacancies,  how  filled,  124. 

Vermont,  building  and  loan  asso- 
ciations of,  51. 

Vice-president,  duties  of,  149. 

Visitation  by  bank  superintendent, 
218. 

Voting,  manner  of,  39,  112, 148. 

Withdrawals,   discussion   concern- 
ing, 131-134. 
encouraged,  when,  73. 
how  made,  168. 
Withdrawing  value,  definition  of, 

19,  131. 

Wisconsin,  building  and  loan  asso- 
ciations of,  60,  61. 


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THE  ORTHOEPIST  :  A  Pronouncing  Manual,  containing  about 
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iV.    THE  HOUSE  AND  ITS  SURROUND- 
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HEALTH  AND  DISEASE. 
VI.    BATHS  AND  BATHING. 
VII.    THE  SKIN  AND  ITS  TROUBLES. 
VIII.    THE  HEART  AND  ITS   FUNO- 
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CROWDED   OUT  O'   CRO FIELD.     By  WILLIAM  O. 
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How  a  plucky  country  boy  made  his  way.  One  of  the  most  successful 
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TSING  TOM  AND  THE  R  UNA  WA  YS.    By  Louis 
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By  HEZEKIAH  BUTTERWORTH,  author  of  "Zigzag  Journeys." 
Illustrated. 

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trated by  J.  O.  DAVIDSON  and  GEORGE  WHARTON  EDWARDS. 
The  story  of  the  heroic  midshipman  of  the  frigate  Constellation. 
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